Contract Law
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121 Terms
(Contract - Offer & Acceptance)
For an agreement to take place… and…
A bilateral contract = the most…., both…
Usually by…
Vs In a unilateral contract… which …
UCs do not …
The only person…
How does the other party accept the offer? & this is the…
A common example
Offeror must make an offer, and the offeree (person to whom the offer is made), must communicate unequivocal acceptance
Most common type of contract, both parties assume an obligation to each other
Usually by making a promise to do something
One party makes an offer/ proposal which calls for an act to be performed by 1+ parties.
Not involve mutual promises
Only person assuming an obligation = maker of the offer
By performing the acts required by the offer (only way)
I.e. notice offering reward for return of lost property
(Contract - Offer & Acceptance)
Suggested 7 step structure for analysing O&A:
Identify…
If there is …. Then determine..
& the …
Is there…
Is the … - i.e. does..
Where… It may…
Was the …
Check whether…
This will be determined by,..
i.e. if they… - then … are relevant
If … then… Are relevant
Was the … - will need to check… (x3)
Identify whether a communication is an offer / an invitation to treat (ITT)
If further communication betw the parties - determine if other party makes a counter-offer, or a request for information?
& effect of these on the original offer?
Acceptance in response to the offer?
Acceptance unqualified - does it correspond exactly with the terms of the offer?
Where acceptance doesn’t mirror the offer, it may be a counter-offer or a request for further info.
Acceptance made using a valid mode?
The acceptance is communicated?
Mode of acceptance used by offeree
Sent acceptance by post - postal rule & issues are relevant
If sent by instantaneous means like email/ fax → rule in Entores v Miles Far East Corp & issues are relevant
Was the offer open at the point of acceptance?
Check whether offer had been terminated as a result of:
Rejection,
Lapse
Revocation
(Contract - Offer & Acceptance)
Requirements for a valid offer
A valid offer must be… x3
These requirements are illustrated in…
Which can be contrasted with… case
Invitation to Treat
Note: an offer must…
If an offer is made… In the event of…
VS an ITT is a … By…
Usually..
Unlike an offer, an ITT cannot…
I.e. (X5)
Clear, certain and display an intention to be bound
Case of Storer v Manchester CC
Gibson v Manchester CC
Be distinguished from a mere ITT!
The Offeror is undertaking to be contractually bound by the terms of that offer in the event of unconditional acceptance being made by the offeree
First step in negotiations which may/ may not lead to a firm offer by one of the parties
Usually takes form of an invitation to make an offer.
Cannot be accepted to form a binding contract
Advertisements, display of goods for sale, auctions and websites, invitations to tender
(Contract - Offer & Acceptance)
End of an Offer/ termination
An offer may come to an end by… (x3)
In each case, the offer… and becomes…
Rejection, lapse or revocation
Loses its legal effect, and becomes incapable of acceptance
(Contract - Offer & Acceptance)
4 rules in regard to valid acceptance
Only the …
The acceptance must be… - i.e. it … and…
An acceptance may… however… and the offeree… - then this will…
Acceptance must be … - raises issues re… Also whether there can be a contract where…
Whether the offer…
If an offer has been… i.e. because… - then the…
Only the person/ people to whom an offer is made (offerees) can accept the offer
Acceptance must be unqualified - i.e. must be a mirror image of the offer, And correspond exactly w its terms
May be communicated in any manner - but if the Offeror prescribes a mode of acceptance (expressly/ impliedly) & The offeree communicates it with a different mode - raises Q as to whether this communicaiton of acceptance suffices
Must be communicated to the Offeror - Issues re post, instantaneous means - also where another person other than the offeree informs the Offeror of acceptance?
Is still open at the time when the offeree accepts it
Been terminated i.e. bc Offeror revokes his offer - then the offeree cannot accept the offer
(Contract - Offer & Acceptance)
Mode of Acceptance Issues
If the Offeror makes… then only
Otherwise (aka unless…), the Offeror will still be bound… (If is is …)
It clear that he will not be bound unless acceptance is communicated in that precise way/ by no other - then Only acceptance by that mode will suffice
(Unless the prescribed mode of acceptance is made mandatory) - another mode will bind the Offeror (if no less advantageous to him)
(Contract - offer & Acceptance)
Acceptance by post
(Non-post) The general rule is that…
BUT where acceptance is made by post- acceptance takes effect from… - known as….,
Authority for this exception
The postal rule applies even…
Authority
4 exceptions to the postal rule
Note: the postal rule does not apply to…
Acceptance is effective from the time it is communicated to the Offeror
The moment the letter of acceptance is properly posted- the ‘postal rule’
Adams v Lindsell
If letter is delayed or lost in the post
Household fire and carriage v grant
Exceptions:
If letter not posted properly
If it is not contemplated that post would be used
Letter is incorrectly addressed
Offeror has ousted the postal rule
Letters revoking offers
(Contract - Offer & Acceptance)
Acceptance by instantaneous means
The general rule is that…
Authority
Where acceptance is sent outside ___ hours, the case ___ where telex was sent… on a .., court held here that…
Case of …. - important for 2x reasons:
__ is to be treated …
So…
Established That the…
Acceptance takes place at the moment it is received by the Offeror
Entores v Miles Far East Corp
Outside office hours - case Mondial Shipping v Astarte - telex sent past 11pm on a Friday, - court held acceptance received at start of business on the Monday
Thomas v BPE solicitors
Email was to be treated like other forms of instantaneous communications
So email acceptance is effective when received
Meaning of ordinary office hours depends on the context of the parties prior communications
(Contract - Offer & Acceptance)
Elements needed for a binding contract x4
Approach taken to determining whether an agreement exists between…. = an __ approach
The court is… But instead with.. Having…
Case authority about this
You do not look at…, you look at…
Offer
& Acceptance
ITCLR - intention to create legal relationships
Consideration
Between Offeror & offeree = an objective approach
Not concerned with internal intent of the parties, but instead what a reasonable Person would say the intention of the parties was, having regard to all the circumstances,
Storer v Manchester CC - dont look at actual intent in his minds, but at what he said and did
(Contract - Offer & Acceptance)
Offer & acceptance = (X2 elements)
An offer must be x2
Illustrated in… - here there was…, the phrase ‘…’ was … ,
Instead it was…
It lacked the…
Intention to be bound
An Offeror …
__ case can be contrasted with … case - here… Did…
Court takes an…
What matters is what…
What the people…
Clear and certain offer displaying an intention to be bound + unequivocal acceptance (communicates)
Gibson v Manchester CC - no binding contract, phrase ‘may be prepared to sell’ was not suff clear and certain to be an offer
Instead it was merely the 1st step in negotiations
Required intention to be legally bound
Must also show this
Gibson case above can be contrasted with contrasted with storer v Manchester CC - here words ‘I will’ did demonstrate an intention to be bound
Takes an objective approach to determining whether there was iTBB
What a reasonable man would say the parties intended
People intended in their minds is not relevant
(Contract - Offer & Acceptance)
ITTs - Advertisements
General rule is that they are regarded as…
Authority
Incl for adverts specifying…
Good reasons for this incl…
And if the advert was an offer… - would lead to
Exception to the GR - GR does not apply where…
Authority
Key fact
Held -
The ad in this case was held to be… because
There was a clear prescribed… (using…)
Constituting…
& the defendant’s… and the …
This reasoning would similarly… if… (x2)
Statements inviting further negotiations or ITT
Partridge v crittenden
Location goods would be sold/ date/ specific price
Advertiser may have limited supplies of the goods in q
Could be accepted by a large no. People- more than they can supply to → Breaching contracts
Advertisement amounts to a unilateral offer
Carlill v carbolic smoke ball co
Deposited £1,000 in a bank to show sincerity
Held - contract established under which defs were bound to pay P £100
A unilateral offer, because:
There was a clear prescribed act (using smoke ball in stated way)
Constituting acceptance
Intention to be bound was clearly demonstrated by £1000 deposit & the certainty of language used
(Similarly could apply this reasoning to ad offering reward for retuning lost property) IF 2 Carlill reqs of:
Prescribed act
Clear intention to be bound
(Contract - Offer & Acceptance)
Display of goods for sale
General rule is that..
Authority
Regardless of… / there is…
Good reasons for this incl …. I.e. through…
& this would be espec concerning where Involving …
Same GP applies to …
Authority - held to be an..
price-marked goods displayed in a shop window are not an offer for sale, but an ITT
Fisher v bell
If shop expressly says goods are an offer/ there is a special offer.
Seller would be obliged to sell goods to anyone who accepted the offer - i.e. through act of taking to tills
Goods That can only be sold to customers of certain age
Goods displayed on shelves in a self-service store
Pharmaceutical society v Boots - ITT
(Contract - Offer & Acceptance)
ITT - Invitations to tender
A request for tenders is used where…
& the requestor… (I.e. __), from…
This is generally… - case…
& the requestor can..
exception to the general rule - where…
Authority
In such case - … with…
A form of .. - with the __ act being…
Case - held an invitation to tender could give rise to a binding contractual oblig to consider tenders in circumstances where (x3)
Then held that there was a …
A party wishes to purchase a majority item/ service
Invited tenders (i.e. offers) from those interested in supplying the goods/ services required
Deemed an ITT - Spencer v Harding
Accept/ reject any tender.
Exception to the GR - where the invitation to tender expressly contains an undertaking to accept the highest/ lowest bit
Harvela investments v royal trust
Party requesting tenders has Made an offer to enter into a contract with party submitting the highest/ lowest bid
Unilateral contract - with required act being making the highest/ lowest bit
Blackpool & Fylde v Blackpool Borough Council
Tenders have been solicited from specified parties known to the requesting party
Was an absolute deadline for submission
Party requesting tenders laid down absolute & non-negotiable conditions for submission
Then held- contractual duty to consider tenders which complied with conditions for submission
(Contract - Offer & Acceptance)
Auction Sales
GR is that the …
Authority
The bidder … Which the …
Acceptance - indicated…
Revocation of an offer -
Reflected in…
Auctions ‘without reserve’
Many auction sales… - if there is … The seller…
BUT in an auction…., the seller… whatever…
& the auctioneer…
Authority - in case of a sale without reserve, there are… X2
First -
Second -
If breach…
BUT is not… (dictated by..)
Approved in (authority)
Auctioneer’s request for bids is an ITT
Payne v Cave
Makes an offer, which auctioneer can accept/ reject
By fall of the auctioneer’s hammer
Bidder may revoke their offer at any time before the hammer falls
S.57 Sale of Goods Act 1979
Have a reserve price - if there is no bid above this price, the seller keeps the goods.
Without reserve - the seller promises to sell to the highest bidder (whatever this bid is)
May be sued for breach of contract if they refuse
OBITER dicta - Warlow v Harrison - 2 contracts:
Bilateral contract - bidder makes an offer capable of acceptance/ rejection by auctioneer
Unilateral c - promise that auction will be without reserve
Highest bona fide bidder is entitled to compensatory damages.
BUT not entitled to the goods (dictated by the bilateral contract)
Barry v Davies
(Contract - Offer & Acceptance)
An offer can come to an end by __ ways
In each case… And..
Rejection
Once an offer is rejected…. (Unless…)
Does not take effect until…
As….
An attempt to accept… may be…
Where… the original…
Authority
Where a … is…, its terms… and not… become…
Difficulties can occur when…
If these terms…
Sometimes said that…
3 ways - offer loses its legal effect & becomes incapable of acceptance
Rejection
It cannot then be accepted (unless Offeror makes same offer again)
Rejection is acc communicated to the Offeror
Only then will Offeror know they are free from the offer
An offer on new terms, may be a rejection of the offer & a counter-offer
Offeree makes a counter-offer, the Original offer is redeemed rejected and cannot be subseq. Accepted
Hyde v Wrench
Counter offer is accepted - its terms (not original offer terms) become the terms of the contract
Offer is made on the Offeror’s standard terms, and the purported acceptance is made on Offeree’s terms.
If these terms are different tin any way - offeree has actually made a counter-offer
Person who fires last shot wins the battle (last asserts their ts & cs)
(Contract - Offer & Acceptance)
Termination of an Offer - Rejection - Counter-Offer VS Req for Info
BUT, if an offeree… As to… or to ask… - then may…
In this event…
Case - of enquiry not rejecting offer
So did not…. Which was…
Responds seeking clarification as to the extent and terms of the offer / ask if Offeror would change any ancillary aspects - then may be a request for further info
Offer remains open for acceptance
Jacques v McLean - ‘please wire whether you would accept..’
Not reject offer - which was later accepted
(Contract - Offer & Acceptance)
Lapse of an offer
An offer may lapse, and therefore… By (x2)
Passage of time
An offer will lapse through passage of time where (x2)
What is …
Death of a party
Death of Offeror - if…, then the…
But if the…
Offeree death - seems it will… so it cannot… even…
Become incapable of acceptance:
By passage of time
By death of 1+ parties
Passage of time
Lapse where:
Acceptance is not maid within the period prescribed by the Offeror/
Where no period is prescribed and acceptance is not made within a reasonable time
Reasonable will depend on the circumstances of the case
Death of a party
If offeree knows that the Offeror has died, then the offer will lapse
But if the offeree is unaware of the offeror’s death, it probably will not.
Cause the offer to lapse so it cannot be accepted after the offeree’s death even by offeree’s representatives
(Contract - Offer & Acceptance) - Termination of an offer
Revocation
The Offeror may…
Authority
BUT once… - the Offeror… / cannot..
Note: revocation of an offer is only… / upon…
Where revoc communicated by post… - case
But __ communication is also… - provided… By.., a … (& notice…)
The means…
So revocation will be effective even… - authority
Danger i.e. reliability of info from them??
Withdraw/ revoke their offer at any time before acceptance
Payne v cave
But once a valid acceptance is made - Offeror is bound by the terms of their offer/ cannot be revoked
Effective if communication/ upon actual notice of it reaching the offeree
Takes effect from moment it is received, not when posted. - Byrne v Van Tienhoven
Indirect communication of revocation is also possible - provided Offeror shown by words. Conduct, a Lear intention to revoke their offer (& notice reached offeree)
Means of communication don’t matter
If communicated by a 3rd party - Dickinson v Dodds
(Contract - Offer & Acceptance) - Termination of an Offer
Revocation cont.
Of a unilateral offer- for these, it remains… (The __)
Authority
BUT an exception to this rule may apply where… And… and…
In these cirucmstances, the Offeror…
& the offeree’s acceptance/ consideration for this… is..
Case - mortgage payments
Communication of revocation in unilateral contracts made to the whole world.
I.e. in case of ___
Here, the Offeror may…
In such circumstances..
It seems likely that… if…. To…. To the…
Possible to revoke offer at any time prior to completion of the required act (the acceptance)
Great northern railway company v Witham
Offeree has partly performed the obligation and is willing & able to complete
May be under an implied obligation not to revoke the offer
Implied promise - is starting to perfom the reqd act.
Errington v errington & woods - held: promise couldn’t be revoked as they had started to pay the instalments (as long as contd. to pay these)
.
Carlill
Have no idea of who/ how many potential offeree’s may be responding to the offer
Communication of revocation is almost impossible
Revocation will be effective if the Offeror takes reasonable steps to bring the revocation To the attention of all those who may have read the offer
(Contract - Offer & Acceptance)
3 rules in relation to acceptance
There are …. To identify whether there has been the… (List)
Accept. must be in response to an offer
Only the …. Can…
Where an offer is made…Then …. Is an… and…
Must be unqualified
And must… (case) / aka the __ __ rule
An assent which is…. Does not…
If the offered;s response to offer is qualified - need to decide…
4 aspects - communication of an unequivocal acceptance needed to form a contract:
Acceptance must be in response to the offer
Must be unqualified
May be necessary to follow a prescribed mode
Must be communicated (covered another time)
Only person (s) to whom an offer is made (offerees) can accept the offer
Generally to the world at large - then Everyone w notice of the offer is an offeree & can accept
& must correspond exactly w the terms of the offer - Hyde v wrench / the mirror image rule
Qualified in any way, does not take effect as acceptance.
If it constitutes a counter-offer or request for further information.
(Contract - Offer & Acceptance)
¾ rules in relation to acceptance
Prescribed mode of acceptance
Acceptance may be…
Generally the offeree may…
BUT if the Offeror …
Authority - what is required to make it mandatory?
IF the Offeror does …
Otherwise - … which is…. Will… (Case)
Communicated in any manner
Decide for himself the manner/ mode of acceptance
BUT if Offeror prescribes, may be mandatory
Manchester diocesan v commercial and general investments - Offeror must use particulalry clear words that his offer must be accepted in a particular manner
Then will not be bound unless acceptance is communicated in same precise way
Any other mode of acceptance, which is no less advantageous to the Offeror, will bind them
Tinn v Goffman
(Contract - Offer & Acceptance)
Acceptance must be communicated
The general rule is that… - else no…
& acceptance applies from…
Rule that… cannot amount…
3rd Party Communication of Acceptance
It is possible for… Where..
Aka - where a __ __ has …
BUT no contract will arise if…
Acceptance must be communicated to the Offeror - or no contract
The moment it is communicated
Silence cannot amount to acceptance
A contract to come into existence, where a person other than the offeree informs the Offeror of acceptance
3rd party has informed Offeror
3rd party did so without authority of the offeree
(Contract - Offer & Acceptance)
Postal Rule
Basic rule in key case ___
Held that… From…
Not from…
When is a letter properly posted? When… or when… (…)
BUT note … By… who is…
The rule places a … (bc easier… than…)
Applies even…
Authority
BUT does not apply…
Authority - PR only applies where…
It has been held to be unreasonable to…
Adam’s v lindsell
Acceptance takes effect from the moment acceptance is properly posted
Not from moment it is received by the Offeror
When put in official letter box OR into hands of post office employee (authorised to recieve letters)
A letter is not properly posted by putting it in hands of postman - who is only authorised to deliver letters.
Greater burden on Offeror than offeree (Easier to prove posting than it is to prove receipt of a letter)
Where the acceptance is delayed/ lost in the post
Household fire v grant
If it was not contemplated that post would be used
Henthorn v Fraser - it was reasonable in all the circumstances to have used post.
Use post when there is an implied condition that prompt acceptance is required
(Contract - Offer & Acceptance)
The Postal Rule
Does not apply to … (Which must…. - authority)
Does not apply if the…
Does not apply if…
Offeror can require… I.e. the Offeror might …. That…
And if the Offeror… then a letter of acceptance would only be effective…
Authority
Letters revoking offers (must be received to be effective - Byrne v Van Tienhoven)
Acceptance is incorrectly addressed
Disapplied by the Offeror
Actual communication i.e. Offeror might state in their offer that they require receipt of acceptance
Sets aside the postal rule, only effective when it is recieved
Holwell Securities v Hughes
(Contract - Offer & Acceptance)
Acceptance must be communicated - Acceptance made by an Instantaneous Mode of communication
GR is that acceptance takes place…
Authority
BUT if the acceptor…. But this is…. (I.e. didnt… and didnt…), then the…
Does the postal rule apply to emails? & authority
Therefore, acceptance by email is…
Case re telex sent outside ordinary office hours & held
At the moment the acceptance is received
Entores v miles far east corporation
If acceptor reasonably believed he has communicated his acceptance, but this is not so bc of a fault of the Offeror
(I.e. didnt hear whole phone convo bc poor reception but then didnt ask for it to be repeated)
Then Offeror may be prevented from arguing that they didn’t receive the acceptance
No - Postal rule is inapplicable to emails - Thomas v BPE solicitors
Not effective just went sent, only when received
Mondial shipping v Astarte shipping
Message sent past 11pm on Friday, received start of business at Monday
(Contract - Offer & Acceptance)- Acceptance must be communicated
Communication waived for unilateral contracts
The communication of… is ….
Authority
Here, performance was…
& there was no… to be…
The same principle would apply… where…
Those who …, and acceptance is complete when…
Acceptance is waived in a unilateral contract
Carlill v Carbolic Smoke Ball co
Performance was sufficient in itself to amount to acceptance
No need for separate notification of acceptance to be given to the Offeror
Cases where reward is offered for return of lost property
Search for item dont need to inform Offeror, and acceptance is complete when the finder returns the object to the Offeror
(Contract - Offer & Agreement) - Certainty
Only an agreement which… can..
To determine whether the parties have reached an agreement on… , the court applies…
Authority
If an agreement is… the court may…
BUT this is… and the courts will… , reflecting…., where this…
Example of too uncertain agreement & reason & authority
Example of enforced & reason & authority
Is sufficiently certain, can be enforced by a court.
All material terms, court applies an objective test
RTS Flexible systems v Molkerei
Incomplete or uncertain, court may not be able to enforce it.
Seen as a last resort, and courts will try to enforce the agreement, reflecting the parties intentions, where possible to do so
An agreement on ‘hire purchase terms’ - too uncertain bc so many different kinds of hire purchase agreements - scammell v ouston
Agreement to buy timber of ‘fair specification’ - enforceable, words could be given a reasonable meaning - Hillas v Acros
(Contract - Consideration)
= an…
Definition - it is ‘an…., or the…., is the…. Of the…, and the promise…’ - case
Key - consideraiton requires…
An … between..
It is the price…
No exchange then…
In a question, you should first … and any…
A number…
2 broad categories of the sets of rules:
Essential ingredient for formation of a binding contract
Act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable
Dunlop v Selffridges
An exchange between the parties
One party pays to make the other party’s promise enforceable
No enforceable contract
Identify the particular rule relevant on the facts & any exceptions that are applicable
Of exceptions exist in relation to this rule
Categories x2:
One party has agreed to pay the other party more money under an existing contract
One party has agreed to accept less money than they are owed by the other party
(Contract - Consideration)
One party agreed to pay other party more money
I.e. example scenario - context
Now, during,,,
Question- Has B…
Have they …. Or are they simply..?
If latter then… Because B…
Aka there is…
General rule that …
A+ B have contract, A pays B for Providing a service & a price is agreed at the outset.
During performance of the contract, A agrees to pay b more money.
Has B done anything in return for that promise of extra payment?
Have they exceeded their contractual duty, or are they simply performing the original service as agreed at the outset
There is no consideration to enforce the extra payment - bc B has provided nothing of value in return for it
Aka there is no exchange betw the parties
Performance of an existing contractual obligation is not good consideration for a promise to pay more
(Contract - Consideration)
Exceptions to the General Rule re performance of an existing contractual obligation
Authority - If B has… then this would be… To.. (__ __)
Authority - this applies where… has not… for the…
This case estd.
= recognition of the idea that… May…. Even if the…
There are a no.
Where there is an issue as to whether… - this raises…
Hartley v Ponsonby - if B has done something new/extra then this would be something Of value to enforce the Extra payment (Good consideration)
Williams v Roffey Bros - applies where performing party has not provided fresh legal consideration for the promise of extra payment.
Estd. Concept of factual consideration
= The paying party may get a practical benefit out of the reshaped deal Even if the contracting party is only performing their existing contractual obligations
Conditions that need to be met for this exception to apply
A’s promise was freely given - raises issue of economic duress
(Contract - Consideration)
Party agrees to accept less than their strict legal rights
Example scenario
General rule & authority - a promise to…
This come back to the idea… - A has…
But there are… i.e….
This is at… / not …
Will allow…
There has to be…
It is a …
The injustice is where… they wont… but then they…
B owes A £100, A agrees to accept £90 - can A later change its mind and seek to enforce its full rights/ amount?
Foakes v Beer - a promise to accept less than your legal rights is unenforceable
Of exchange - A has gotten nothing out of the reshaped deal, there is no exchange/ Consideration
Exceptions to this rule, i.e. equitable exception of promissory estoppel
The court’s discretion / not available as of right
A promise to accept less to be enforceable even when there is no consideration
No consideration for promissory estoppel to come in
Defence to injustice -
Where one party has promised they wont enforce their full rights against you, but then they go back on their word and insist on their full contractual rights,
(Contract - Consideration)
Executory and executed consideration
Executory C - is where… make… to…After the…
I.e. seller promises…, and buyer promises to ..
At the time…., neither,,, But…
And a party who…
The contracting parties make promises to each other to perform something In the future, after the contract has been formed
Seller promises to deliver goods at some time, buyer promises to pay for them on delivery
Of the agreement, neither party has done anything towards performance of the promises made BUT the agreement still has contractual force
Fails to carry out their promise, can be sued
(Contract - Consideration)
Executed consideration
Is where, at…, the consideration…
I.e. a __ contract - where.. - authority
The perfomance… is both… (Thus…) and the…
SO valuable consideration may … x2
At the time of the formation of the contract, the consideration has already been performed
Unilateral contract - the price paid in exchange for perfomance - Carlill
Performance of the reqd act is both the acceptance of the offer (Thus at the time when the contracting parties make is formed) and the executed consideration
Be something promised or something done
(Contract - Consideration)
Rules Governing Consideration x 4 (important)
Consid must not be past
Consid. Must not move from the promise
Consid need not be adequate
Consid. Must be sufficient
(Contract - Consideration)
Must not be past
Generally… Which has… , as___
Consideration must be ….
Authority - here someone …. But it was held that…
The __ obligation to… was insufficient to…
Exception exists…
Where the prior … at… and it was …
Authority
3 conditions for the exception to apply:
The act must …
Parties must…
Either _ or _
The or _ of other __ must…
I.e. exmaple scenario
Not possible to use some act/ forbearance which has taken place prior to promise to pay, as consideration
Given in exchange for the promise of the party,
Eastwood v Kenyon - failed to honour promise to pay back childhood care fees But held that the fees were not good consideration bc it was in the past.
The moral obligation to fulfil such promise was insuff to create a legally binding contract
Prior act/ service was provided by the promisee at the promisor’s request, and it was always understood that payment would be made for it.
Pao On v Lau Yiu. Long
Act must be done at promisor’s request
parties must have understood that it was to be rewarded by either payment/ conferment of another benefit
Expressly or impliedly
The payment/ conferment of benefit must have been legally enforceable
I.e. taking car to garage for repairs, leaving specific price to be decided after completion of repairs
(Contract - Consideration)
Consideration must move from the promisee
Effectively means that a… may not…
Relates to but must be distinguished from… - this states that…
Authority - groom… But he could..
The consideration had only…
Party who has not provided consideration may not bring an action to enforce a contract
The rule of private of contract - Only a person who is party to a contract may sue/ be sued on that contract
Tweddle v Atkinson - groom sought to enforce his F-I-L promise to pay him £200, but he could not as He had provided no consideration for the promise
Had only been provided by the 2 fathers.
(Contract - Consideration)
Need not be adequate
Doctrine of… - the courts will not…
I.e. no reason why…
If an agreement is…, then the…
Authority - strange consideration!- … were…. Even though…
Consideration must be sufficient
Consideration must…
But it does not… so long as…
If a thing of…., then… and the court will not…
Case - considerations - the of a to …., for the payment of…. And an …
Freedom of contract- courts wont interfere w a bargain freely reached by the parties
Can’t sell a rolls Royce for 1p
Freely reached - then the inadequacy of the price is immaterial
Chappel & Co v Nestle - chocolate bar wrappers were a part of the consideration- even though they were of no further value once received by the company.
Have some value ‘in the eyes of the law’
But it matters not how small that value is, so long as it is worth something.
If a thing of value can be idenitfied - then there will be suff consideration & court won’t enquire as to its adequacy
Thomas v Thomas - transfer of house to deceased’s widow for payment from widow of £1 per annum & agreement to keep house in repair
(Contract - Consideration) - Variation of Contract
Circumstances may… i.e… (x2)
To respond to these changes…
For a variation of contract to be binding… are required
(X3)
Ensuring that… Is typically the… In making…
Change during the life of a contract , i.e.
cost of raw materials
Scope of work reqd may change
To respond - parties may wish to vary their contract
The same essential components needed to form a valid contract are required
Agreement, consideration, intention to create legal relations
Consideration has been provided by both parties is typically the most contentious issue In making a variation of contract binding
(Contract - Consideration)
When will an existing obligation be good consideration
3 examples where a party might already be under an obligation to do the same thing (before entering into/ varying a contract)
Issue to determine = if… will this be…
3 examples
An existing contractual obligation between the same parties
A public duty , or
An existing contract w a third party
If a party offers as consideration something that they are already obliged to do (pre-existing oblig) - will this be deemed good consideration?
(Contract - Consideration)
An obligation in an existing contract betw. The parties
An agreement to …To perform…., is …
Because…
So there is no..
The party…
Authority - here the seamen gave.. - they were… To do..
Here they…
If the sailors… , then there..
Authority 2 - Sailors were contractually obliged to…
BUT here they… When they… and when the ship…
This amounted…
Difference?
Vary a contract to pay party an additional sum of money to perform the same thing they were already contractually bound to do, is not binding
No consideration has been provided for the variation
No valid exchange between the parties
Party paying extra is getting nothing of value in return for their additional payment.
Stilk v. Myrick - seamen gave no consideration - were already contractually bound to do any extra Work to complete the voyage
(Shared extra work from deserters)
If they sailors had agreed to exceed their existing obligations, then there would have been consideration
Hartley V Ponsonby - ‘tale all reasonable endeavours’ to get ship home
Went above these existing obligs, when made journey in dangerous conditions & when ship dangerously undermanned
Amounted to good consideration
Proportion of sailors deserted in Hartley was far greater - radically changing nature of voyage
(Also concern about pressure placed on captain/ ‘economic duress’= not thing then - to pay more £ in stilk)
Contract - Consideration)
An obligation in an existing contract betw. The parties
Courts revisited this issue in…
Here, all they had done…
However, court considered the __ __ that…
Here it was … (x3)
‘__’ consideration - acknowledging that… But the party…
Williams v Roffey Bros
Was complete the carpentry work that they were obligated to under the contract
Court considered the practical benefit that had been received by the other party
Avoidance of the late completion fee , a more efficient working arrangement, and avoiding need to find An alternative contractor to do the work
Factual consideration - acknowledging that nothing new is being promised but the party is still getting something out of the reshaped deal
Contract - Consideration)
An obligation in an existing contract betw. The parties
The conditions necessary to establish factual consideration (x6) - authority?
A enters… in return for…
At some stage…, B has…. To…
B therefore… in return for..
as a result of …, B…
B’s promise… then
The benefit…. For…
→ so…
Williams v Roffey
A enters into contract with B to supply goods/ services to B in return for payment by B, and
At some stage before A has completely performed his contractual obligations, B has reason to doubt whether A will/ will be able to complete his side of bargain, and
B therefore promises A an additional payment in return for A’s promise to perform his contractual obligations on time
As a result of giving his promise, B obtains a practical benefit/ avoids a disbenefit, and
Bs promise is not given as a result of economic duress/ fraud from A, then
The benefit to B is capable of being consideration for B;s promise
→ so the promise will be legally binding
(Contract - Consideration)
(Existing) Obligations under a public duty to do so - consideration?
Principle is that - in these circumstances merely…. Will not…
Issue has also arisen regarding… - is this just…
Authority - here a def… and a __ __ gave…, but … - arguing that the…
Held that the duty… And they are not under
So he… (providing…)
Merely carrying out a public duty imposed by the law will not amount to sufficient consideration
Rewards claimed by police officers for giving information - just doing their public duty?
England v Davidson - Def offered a reward for info leading to the conviction of a particular criminal, a police officer did so, but def refused to pay - Arguing police office was just doing his public duty
Held - duty of a police officer is the prevention of crime, Not under duty to provide information to a private individual
Went beyond his public duty (providing consideration for the offer of reward)
(Contract - Consideration)
Existing Obligations to a Third Party
Situation where…
The performance of … , will be regarded…
Authority & reasoning?
Because the __ still …
& the party offering this… (If it…)
A has an existing contractual oblig to B and wishes to rely on a promise to do the same things as consideration for a contract with C
The pre-existing duty owed to a 3rd party, will be regarded as suff consideration for a promise given by the promisor
New Zealand shipping v AM satterthwaite
The promisee obtains the benefit of a direct obligation which he can enforce
Is offering to put themselves at risk of double liability (if it fails to meet its obligs to the 2 parties
(Contract - Consideration)
Part payment of a debt/ accepting a lesser sum
When a debtor promises… In return for… They are…
=they are trying to …. Which is not…
So the debtor… even where…
Simply paying.. will…
Authority - the agreement…
To pay part of their debt in return for a release from the remainder Of their liability, - they are simply doing something which they are already obliged to do
=Offer an existing obligation as consideration - not good consideration
Remains liable even where the creditor has agreed to release them from further liability
Paying a smaller sum than owed will not be suff consideration
Foakes v beer - the agreement was unsupported by consideration
(Contract - Consideration)
Circumstances in which Foakes v Beer does not apply:
The rule in F v B is only applicable if…
BUT if at…, then this will…
And the court will not…
Examples might be x3 & authority
The promise of the creditor to accept a lesser sum sum is unsupported by fresh consideration from the promisee
BUT if at creditor’s request a new element is introduced - this will amount to good consideration
Won’t enquire as to the value of the new element
Examples
Payment at a different place,
At a different time
Or by providing a different thing in place of money - Pinnel’s case 1602.
(Contract - Consideration)
Payment of a lesser sum by a 3rd party
Scenario
In this circumstance, the creditor..
Contrast foakes v beer with… case
Authority - the CA here… - held that W v R…, where…
So there is a contrast between (x2)
BUT a different view taken in next authority (CA)
Acknowledged that while…. , here agreed there..
Justification? - the __ obtained… By… VS.
& promise that the …
Also the landlord was not…
Applied …
BUT this case was … - so it remains an…
3rd party enters into agreement w creditor- creditor accepts payment by 3rd party of a lesser sum than the full debt (of debtor’s)
Cannot then sue the debtor for the difference
F vs B VS Williams and Roffey - in W v F - practical benefit obtained from party completing its contractual obligations (consideration)>
Re Selectmove - CA took restrictive approach, held W v R / PB did not apply to cases where creditor agrees to accept a lesser sum in settlement of a debt.
Contrast:
Promises to pay more for an existing contractual obligation
Where practical benefit can be applied
Promises to accept less than your legal rights
Where it cannot
MWB Business Exchange v Rock Advertising
Part payment of a sum already due is not usually good consideration, here agreed there was suff consideration
Landlord obtained a practical benefit by keeping tenant in the property Vs it being vacant
& promise balance would be paid over coming months
Not under economic duress from tenant
Williams v Roffey
But appealed at SC for other non-consideration reasons - unanswered issue
(Contract - Consideration)
Promissory Estoppel
This is an __ doctrine which effectively… Despite it…
PE aims to … who has… & it stops… Where…
Many PE cases involve… - i.e. promising……
BUT PE is…
Case where modern doctrine of PE derives from - here the landlord’s.. to the… that he wouldn’t…., and in not… - the tenant had…
Another authority developed this doctrine
Equitable doctrine, effectively allows a promise to be enforced despite it not being supported by consideration
Protect a party who has relied on such a promise & it stops the promisor from going back on their promise where promisee has relied on it
Part payment of a debt - ie.. creditor promising they will not require debt to be paid in full, debtor relying on this, creditor going back on this.
Not limited to such circumstances
Hughes v Metropolitan Railway (1877) - landlord’s conduct was an implied promise to the tenant, that he wouldnt enforce the forfeiture at the end of the notice period & in not doing the repairs (Part of his oblig.) - the tenant had been relying on this promise
Central London Property v High Trees
(Contract - Consideration) - Promissory Estoppel
Central London Property v High Trees House
Brief facts/ scenario
Held -
But importantly… considered… if…
Concluded that…
In reaching this decision…
Stated that a promise would be binding where…
If it was…
& to the knowledge… it was…
It was…
→ then…
So effectively, the tenant… To prevent the… to accept…
So big development - J said would allow a… Provided…
Reduced rent for war years, tenant contd. pay reduced rate for years after, landlord sought payment for some of this latter time.
Held - landlord should succeed in claim
But importantly, in obiter, j considered whether an action would succeed if landlord sought to obtain arrears for war years also
That this action fail
Judge applied doctrine of PE
Promise would be binding where:
It was intended to create legal relations,
& to knwoeldge of person making promise it was going to be acted on by person to whom it was made
It was in fact acted on
→ then promise would binding
Could rely on defence of PE to prevent Landlord from going back on their promise to accept reduced rent during the war year
Promise to be enforced in the absence of consideration, provided the promisee had relied on that promise
(Contract - Consideration) - Promissory Estoppel
BUT there has been… within…
I.e. PE acts as a … not…
Meaning PE can only…, it cannot…
Essentially PE does…
In order to … you must show…
Authority making this clear - brief facts
But it was held that… , the promise…
Judicial keenness to constrain PE within strict parameters.
Shield, and not a sword
PE can only act as a defence (shield) To an action, it cannot be used as a cause of action (a sword)
Not give a party the right to sue upon a promise
Sue upon a promise given to you, must show that you have provided consideration in return for it
Combe v Combe - following divorce, husband indicated would make allowance of £100 / pa to Mrs, didnt do so, wife brought an action, tried to use PE as a cause of action - husband made promise she had relied upon.
Held that wife had given no consideration for the husband’s promise, promise wasn’t binding, wouldnt suceed in action.
(Contract - Consideration) - Promissory Estoppel
There must be… That … will not…
Authority
The promise must be … and not…
A promise can be … (i.e.)
A clear and unequivocal promise/ representation that existing legal rights will not be fully enforced.
Woodhouse A.C. Israel v Nigerian Produce
Intended to affect legal relations and not simply amount To a gratuitous privilege given to the promisee
Express or implied - i.e. by conduct
(Contract - Consideration) - Promissory Estoppel
A ___ of __ in …
It is an essential element of the doctrine of PE that the … (usually __) Should…
I.e. it must have… To… (Authority)
Therefore, an act…
Debate about whether part-payment of a debt itself can be the…
It may be, provided…
Usually to prove PE, it must be shown that… I.e. in a…
BUT in (authority) it was made clear…
INSTEAD - it is… has made… so that it would be …
A change of position in reliance of the promise
Promisee (usually debtor) should have relied upon The promise/ representation
Must have influenced the conduct of the party to whom It was made (High Trees)
An act which takes place before the promise, cannot be in reliance on the promise
Act of reliance
Provided the promise influence part of the part-payment
The promisee has relied on the promise, to their detriment aka in a worse position that had the promise never been made
In High Trees - made clear that detrimental reliance is nOT required for PE
INSTEAD - sufficient if the promisee has made a CHANGE OF POSITION in reliance on the promise so It would be inequitable to allow promisor to go back on their promise
(Contract - Consideration) - Promissory Estoppel
Inequitable to allow the promisor to go back on their promise
PE, as an … , is based on …
The courts, in ….., undertake a … to determine whether… To allow…
If it would… , then the… and the promisor…
Although it is not… To…, if … , this would be… Of …
Authority
The courts will also look at … To determine…
Authority - here the builders… , so the debtor..
Because…
Equitable doctrine, is based on fairness & is discretionary
Courts, in exercising their discretion, undertake a balancing exercise to determine whether it would be inequitable To allow the promisor to go back on their promise.
If it would be inequitable, then the defence will apply And the promisor will be estopped from going back on their promise.
Not necessary for the promisee to show that they relied on the promise to their detriment, if detrimental reliance is present, this would be a factor weighed in favour of granting the defence.
The Post Chaser (case)
The conduct of both parties, to determine whether./ not to grant the defence
Builders v Rees - builders promise to accept less had been extracted by intimidation (from debtor) - so debtor couldn’t rely on doctrine of PE
Because - Those who seek equity, must do equity
(Contract - Consideration) - Promissory Estoppel
Does Promissory Estoppel Suspend or Extinguish Legal Rights
It seems that the ... may arise…
Firstly - `The right to … may… once…
As envisaged by judge in (authority)
Alternatively, the promisor’s right to may resume… after…
Authority
This reflects that the effect of PE is generally… , noy…
Key principle is that the court will…, and in some cases this might mean.. . - i.e. if in High Trees the landlord…
Exceptionally, rights might also be ___ where … / it would be ///
The promisor’s right to resume their strict legal rights, may arise in one of two ways
First - the right to periodic payments may resume once the period over which PE operates, ceases
High trees -
May resume their full legal rights after giving reaosnable notice of their intention to do so
Tool metal v tungsten
To suspend the rights concerned, not extinguished them
Order an outcome which is just and equitable, might mean that sometimes a past right is extinguished i.e. if landlord in high trees sought rent for the full period - would have been estopped from doing so/ right to that rent would have been extinguished
Right may also be extinguished where it has become impossible for the other party to meet the obligation/ clearly inequitable to require them to
(Contract - ITCLR)
Intention to create legal relations
One element… - without, there is…
It means an intention to…
The test of intention is ___ - meaning that the … will be … Rather than…
Authority - Q
The courts seek to … - whether …
Logical to try to distinguish between agreements…
Needed for a binding contract / essential - else no contract
Enter into an agreement with legal ramifications/ a contract
Objective - intention of the parties will be determined more by what the actiosn of the parties in the particular circumstances suggest, Rather than taking evidence from parties of what was acc in their minds
Merritt v Merritt - would reasonable people regard the agreement as intended to be binding?
Give effect to the intentions of the parties - whether express or presumed.
Of the commercial kind, and those of the domestic kind
(Contract- ITCLR) - Presumptions
If it is a commercial agreement - then it is…
Next Q = whether…
If it is a social/ domestic agreement - then it is …
Next Q…
If so, it is presumed that there IS an ITCLR
Next Q= whether the presumption has been rebutted
If so, it is presumed that there IS NOT an ITCLR
Next Q= whether the presumption has been rebutted
(Contract - ITCLR) - Commercial Agreements
Ordinary presumption is that in…, the parties intend…
The courts will…
NOTE: commercial agreements are not…
Also incl… And… i.e…
If a party to the agreement wishes to assert that legal relations were not intended when agreement was entered into, the… - and…
In commercial/ business agreement - then parties intend that it should be legally binding
Courts will readily imply this
Not limited to agreements between 2 businesses
Also incl agreements betw indivs and businesses & agreements betw indivs i.e. purchase their car
Onus on him to rebut the presumption & the burden of doing so is a heavy one
(Contract - ITCLR)
It is …. To include… that indicates…
BUT … need to be used
As the language…
And __ wording is unlikely…. That parties…
In the case of adverts… Can be …
Case - here company argued… Because it was merely…., but the __- showed… & would be understood…
Open to parties to incl wording w/in agreement indicating that the parties dont intent TCLR
BUT clear words need to be used
As lang likely to come under scrutiny
And ambig wording is unlikely to rebut the presumption that parties to commercial/ business agreements intend those agreements to be binding
An ITCLR and offer &acceptance can be v closely linked
Carlill - Company argued the ad was not binding bc merely a spin/ but deposit showed an intention to be bound & would be understood by a. Reasonable person to have that effect.
(Contract - ITCLR)
In some circumstances, it is difficult to … Is intended…
Case - produced…, offered… - HL were divided on whether… & if so whether…
One argument was.. If there was a…
Majority felt… - relying on… And the large… By…
This is not a compleltely… as while it justifies… it does not…
In contrast, the minority… Relying on the… (X3 factors)
Ascertain whether a particular promise is intended to have legal effect
Esso Petroleum v Commissioners of Customs
Produced World Cup coins, offered free to customers w purchase of petrol - HL divided on whether the offer of a free coin could amount to a ‘sale’ & if so whether There was any contract
That coins could only be for sale If there was an ITCLR
That there was such an intention - Relying on the business context, and the large Commercial advantage esso expected from the promotion by attracting customers
Not completely satisfactory analysis as while explained esso’s intention, not other parties
Minority found no ITCLR - relying on lang used in the offer, trivial value of the coins, and unlikelihood that anyone denied a coin would believed had legal remedy available
(Contract - ITCLR) - Statutory provisions
Some states provisions may stipulate that.. Unless…
I.e. statutory example: __ agreements between… are presumed.. . Unless the agreement…a nd…
Where these conditions… , the agreement..
No ITCLR can be inferred unless There is an express provision to the contrary
S.179 Trade Union and Labour Relations (Consolidation) Act 1992
Collective agreements betw TUs and employees are presumed to lack the required intention to be legally binding - unless agreement is in writing and constrains a provision to other effect
Are satisfied, the agreement will be presumed ot have the necessary legal enforceability
(Contract - ITCLR) - Subject to Contract
This expression ‘StoC’ creates a… Do not… until…
An agreement subject to contract is…
I.e. might be used to… Or… , before…
Strong inference that the parties do not intend to be bound until The formal execution of a contract
Prima facie, not binding
Might be used to give parties an opp to reflect/ seek legal advice etc. before entering a binding contract…
(Contract - ITCLR) - Social & Domestic Agreements
In cases of social/ family/ other domestic agreements, the usual presumption is that…
It is common sense in these types of agreements i.e. like… Don’t…
This conclusion is derived from… Would … the right… for failure…
Agreements between spouses - if the parties reach… Then the courts have …
Case
BUT the … and certain … may…
The q of whether the presumption is rebutted, will be … And the …
There is no ITCLR
2. Family agreements re allocation of domestic chores etc., - dont amount to legally enforceable agreements
The fact that none of the parties would Reasonably envisage the right to sue the other For failure to honour the commitment
Reach agreement before any breakdown in the relationship, - then courts have shown an unwillingness to find an ITCLR
Balfour v Balfour
BUT the presumption can be rebutted and certain social and social and domestic agreements may be legally enforceable
Will be resolved by examining the circumstances of each case And the language used by the parties
(Contract - ITCLR)
One situation where the courts have shown a willingness to … Is in relation to … Who were… When the…
Authority
Similar problems of intention can arise between other…
Case - shows the …
The c and d were..
Agreement between the parties was that id the … and came to …To read…, wiht the intention of .. (where the mother __)
Then the mother would…
After the daughter began… , the agreement was varied
Mother bought… and the daughter was… and to use the rent…
6 years after…, the daughter…
And they…
The mother brought… , and the daughter sought to …
CA held that.. and the mother…
To rebut the usual presumption, is in relation to Agreements made betw spouses who We’re in the process of separating/ are separated when The agreement was reached,.
Merritt v Merritt
Other family memebrs
Jones v Padavatton - difficulty of determining such cases
Mother and daughter
Daughter gave up her v satisfactory pensionable job in the USA And came to London To read for the bar w intention of practicing law in Trinidad (Mum lived)
Pay an allowance of $200/ mo to daughter
Her studies in london, thr agreement was varied
Bought house a london, daughter was to live there rent free and use rent from letting out other rooms to cover her maintenance
Commencing her studies. Daughter had yea to pass her bar exams
Fell out
Brought an action to gain possession of the house And daughter sought to rely on their agreement as a defence
Agreemnt betw mother and daughter lacked contractual intent, and mother was entitled to possession
(Contract - Capacity)
If a person does not…, then a contract with… is…
There are rules on capacity to contract for those who are… And… i.e… (X3 examples)
These rules are there to… and also to … with those of…
Persons over … have …, if they are of… And are not… Such as …
If a person doesn’t have capacity to enter into a contract, then a contract w them is unlikely to bind them
Weak and less capable of looking after themselves - i.e. children, mentally ill, temporarily lacking mental capacity
Protect the vulnerable, and protect others who make contract w those of limited capacity
Age of 18, have full contractual capacity, if they are of sound mind and not suffering from a factor ruling out capacity such as drunkenness.
(Contract - Capacity)
Minors
Generally a person is not… , even if the… , or if the…
No. Of main exceptions to this rule ?
Which relate to (x2)
Bound by a contract entered into under the age of 18, Even if other party contracting does not know about this fact, or if the minor has lied about their age
2 main exceptions: re:
‘Necessaries’
Contracts of employment/ apprenticeship/ education
(Contract - Capacity) - Necessaries
A minor is bound by… , if the…
A minor must pay…, rather than…
Contracts for necessaries incl things like x4, but …
Necessaries also include…, provided they are not…
What will be deemed a necessary needs… And their…
Case re waistcoats- were… According to… but not…
Accordingly….
A contract to supply necessaries to them, if the contract is for their benefit
A reasonable price for these, rather than the actual cost of the ‘necessaries’ supplied
Incl supply of food, medicines, accommodation, and clothing - but are not limited to such essentials
Items purchases for the minor’s real use, provided they are not products and services for comfort/ pleasure only
To be construed w regard to the minor’s age and their actual requirements
Nash v Inman - waistcoats supplied to minor who was an undergrad, were suitable according to minor’s station in life, but not necessary as he already had Sufficient clothing
Contract was not enforceable
(Contracts - Capacity)
Contracts of employment/ apprenticeship/ education
A minor is also….. (or …), but only if it …
Authority - here a young __ ’s contract with the __ was not…and so could …
The terms were…
They restricted his…
And the payment of… depended on…
Also bound by a COE/ apprenticeship/ education (or analogous contract), but only if it is for their benefit
Aylesbury football club v Watford association FC
Young footballer’s contract w the club was not beneficial and could not be enforced
Terms were onerous for him
They restricted his freedom to pursue a football career
And the payment of wages depended on the employer’s will
(Contract - Capacity)
The effect of entering into a contract with a minor
Unless…., the contract cannot…, although the …
Exception - there are a small… Which are…, unless the minor…
If a minor…. Once they reach…, then the contract…
Unless one of the exceptions applies, the contract cannot be enforced agains tthe minor, although the minor can enforce it against the other party
Small no. Of exceptional type contracts which are enforceable against minor, Unless the minor specifically repudiates them
Ratifies a contract once they reach age of 18, then the contract will be binding on them
(See flow diagrams)
(Contract - Capacity) - Mental Incapacity & Intoxication
A person lacks… under… if ‘he is…’ at the…, whether the ___ is …
Capacity is not something which a person either…. - rather Q that should be asked is whether someone …
Seciton which describes the impairment
As being unable to x4
What is the relevant information section?
Relevant information relates to the…. Of (x2)…
Lacks capacity under s.2 The Mental Capacity Act 2005 if ‘he is unable to make a decision for himself in relation to the matter’ at the time the contract is made, whether the impairment is permanent or temporary
Has or doesnt have for all purposes - Q= whether someone has capacity in relation to that particular decision
S.3(1)
Being unable to
Understand the relevant info;
Retain the relevant info
Use the relevant info;
And/ or communicate a decision
S.3(4) - the relevant info relates to the reasonably foreseeable consequences of :
Deciding one way or another, or
Failing to make a decision.
(Contract - Capacity)
The Mental Capacity Act also …. As to… To…. (S?)
The statutory definition of capacity is expressed…. But it is … As the approach… for the …
Gives the court of protection the power to make declarations as to a person’s capacity and ability to contract in Specified situations - s.15
To be for the purposes of the act only, but it is in practice v similar/ same as approach taken when determining capacity for the purposes of contract law
(Contract - Capacity)
The effect of entering into a contract with a person lacking capacity
Under section __, a person without capacity still… To pay a ….
These are defined as …. And to his… (seciton __)
BUT, in any other case of capacity, the position is …Can establish … (x 2)
Authority
If this can be established then…
Similar rules apply to contracts…
An individual who becomes… that they… will have to…
But will not be…., provided the …
Case
This position should logically…
S.7, still remains liable to pay a reasonable price for ‘necessaries’
Goods/ services ‘suitable to a person’s condition of life And to his actual requirements at the time of supply - s.7(2)
That the contract is binding unless the person claiming incapacity can establish
They did not understand what they were doing, and
That the other party knew that to be the case
Imperial loan v stone
Then the contract will be voidable
Entered into by drunken persons
So intoxicated that they do not understand what they are doing, will have to pay a reaosnable price for necessaries.
But wont be bound by any other contract they make, Provided the other party knew/ Ought to have known about their intoxication
Matthews v Baxter
Extend to incapacity by other intoxicating substances
(Contract - Duress & Undue Influence)
1. = factors that might …
Contractual obligations shoudl be both …
Duress & UI are both doctrines which deal with… has not… and accordingly. ..
Duress involves…
Consent is not…
Historically, duress was only confined to… (X2) -When… then the contract… (known as …)
But expanded..
The same arises where An agreement is entered into as… (known as…)
There is also __ duress - the idea that someon could be forced… By…
A contract or ___ of a contract which has been… is… which means that the wronged party may…. And to have…
Economic duress = a more ___ area of law
Stop a contract being formed
Freely and independently assumed
Situations where free and indep consent to a contract has not been given And accordingly, the contracts concerned are not allowed to stand
One party coercing another party into a contract being
Consent is not present/ given freely
The threat of /actual violence → when Person enters into a contract wholly/ partly bc of this, the contract wont be binding on them (Duress to the person)
As a result of the seizure of/ damage to someone’s property (Duress to property)
Economic duress- forced to enter into a contract by economic pressure
A contract/ variation of a contract which has been entered into under duress is voidable - meaning the wronged party may be able to take action to have it set aside and have parities returned To the position they were in before the contract was entered into
More complicated
(Contract - Duress & Undue Influence) - Duress to the Person
Duress can … when it amounts to ….
Duress to the person is the least… and the most…
Leading case on DTP
once it is established… , then duress..
So long as…
Also stated that the burden of proof was… To show… contributed…
So the causation test…. Is not…
The duress need be … - it need not be ..
Vitiate a contract when it amounts to actual/ threatened violence
DTP is least controversial and most long estd. Category of duress
Barton v Armstrong
Once it is estd. That physical threats contributed to the decision to enter into a contract, duress will be found
The threats were one of the reasons for contracting
Was On the party who exerted the pressure To show that the treats and unlawful pressure contributed nothing to the victim’s decision to contract
For duress to the person, is not a difficult one to overcome
Only one factor influencing the wronged party’s behaviour - need not be decisive
(Contract - Duress & Undue Influence) Duress
Duress to Goods
A contract can also be avoided where there is …. Or to…
Authority
To succeed in est goods to duress, it seems likely that it must be shown… If there…
Unlike duress to the person, it is … (But not a …) , influencing…
Duress to property
= …
But for the… , the …
Threat to seize the owner’s property, or to damage it
Occidental Worldwide Investment v Skibs
That the agreement would not have been entered into if there Had not been the duress
Unlikely to be sufficient to show that duress will be one factor (But not a decisive factor), influencing the wronged party’s behaviour
Duress to property
Seizure or damage to owner’s property / OR threat of this
But for the duress, the agreement would not have been entered into
(Contract - Duress & Undue Influence) - Economic Duress
The fact that… to enter into…. Will not…
Parties put…
Authority re establishing economic duress - what are these 3 elements?- there must be PRESSURE whose practical effect is that there is… x3
The courts have subsequently clarified that ‘significant cause’ means… If there…
The fact that someone is under economic pressure to enter into a contract will not alone give rise to economci duress
Parties put economic pressure on each other all the time
DSND Subsea v Petroleum Geo - to establish ED, 3 elements must be present
Compulsion/ a lack of practical choice for the victim
Which is illegitimate
And which is a significant cause of them entering the contract
It must be shown that the agreement would not have been entered into if there had not been the duress.
(Contract - Duress & Economic Duress) - Economic Duress Elements
Lack of Practical Choice
the pressure must result in… - aka they have no…but to…
key case- here court accepted…
contractor employed to… and they.. - who … the work and …
F knew it would be …
Held - Carillion had …if they were to… and to avoid…
it was also held that it would be … because of the …
lack of practical choice for the victim - aka they have no practical alternative but to acquiesce to the demand
Carillion Construction v Felix - that sum had been paid by the contractor under duress
to construct a building, and they subcontracted supply of cladding to Felix - who delayed the work and negotiated more money
impossible for Carillion to find another supplier in time
no viable alternative but to agree to felix’s demands - if were to complete project on time and avoid heavy fees for late completion
would be unrealistic to expect party to seek a mandatory injunction bc of the 6 weeks delay this would have caused
(Contract - Duress & Economic Duress) - Economic Duress Elements
Lack of Practical Choice
Case re road Hauliers
here the defendant was a … and was … and unable… and so reluctantly…
When sued, lodged…
held that where a party …. that were…, this amounted to…
Atlas Express v Kafco
here d was a small org, heavily reliant on the contract w the store, and unable to find another carrier so reluctantly agreed to pay the vaired imposed minimum charge
a complaint of economic duress as a defence
where a party has no alternative but to accept revised terms that were detrimental to its interest, this amounted to economic duress.
t(Contract - Duress & Economic Duress) - Economic Duress Elements
Lack of Practical Choice
Case re stands erected at exhibition for Def
a week before the exhibition…refusing to …, until a … - C demanded an extra £___ - else said that…
the def …
BUT then the def… and the C then…
held by CA that since… - they had… .but to …
So it was paid…
and the C was therefore not…
B& S Contracts and Design v Victor Green Publications
the C’s workmen striked, refusing to return until a pay demand was met - an extra £4.5k - else contract would be cancelled
paid the amount to have the contract performed
deducted this figure from the contract price paid to C and the C then claimed the balance
since cancellation of the contract would have caused seirous damage to d’s economic interests - they had no practical choice but to pay the sum demanded by C
paid under duress
C not entitled to the extra £4.5k
(Contract - Duress & Economic Duress) - Economic Duress Elements
Lack of Practical Choice
Case re selling methanol
here the Ds reneged…, knowing that the Cs needed…
The defs gave a … - to deliver a …
court held that in the circumstances, the Cs had…
the defs knew their demands would cause…
and the Ds demands were… that they would’t…
C complied w demands…
Kolmar Group v Traxpo Enterprises
reneged on the original agreement, knowing the CS needed the methanol to satisfy an urgent order for a v important client
take it or leave it proposal - delivering lesser quantity at a higher price
had no alternative but to accept the revised proposal
cause loss to the Cs
backed by coercive and unlawful threats that they wouldnt perform their obligations
as a result of those threats
(Contract - Duress & Economic Duress) - Economic Duress Elements
Ilegitimate Pressure
Authority - relevant factors to consider when assessing the legitimacy of the pressure x4
whether there has …
aka …
this is an …, therefore a threat to … will usually…
2x cases demonstrating this
whether the person … has…
whether the victim…
whether he affirmed…
DSND - factors re assessing legitimacy of the pressure:
Whether there has been an actual/ threatened breach of contract,
aka failure to comply w terms of the contract
an unlawful threat, therefore a threat to breach contract, will usually amount to illegitimate pressure.
Carillion - late completion of works, Atlas - refusal to carry further loads of goods
whether the person allegedly exerting the pressure has acted in good/ bad faith
whether the victim protested at the time
whether he affirmed and sought to rely on the contract
(Contract - Duress & Economic Duress) - Economic Duress Elements
Ilegitimate Pressure
Factor 2 - whether the person allegedly exerting the pressure has acted in good/ bad faith
if the threat is made for … then it is made… and will almost inevitably..
2x cases demonstrating this - here the threats were…. that they…
there was no… - it was __
contrast with case of __- where the pressure… - rather until… - this was not …. but instead… by a …
the dividing line can be …
whether a __ threat can amount to …. and a… is contentious
case- court considered that… might…
as here the threat was … but not…
the Ds were using the threat as… and not as means…
BUT had this threat not…., then the court were prepared to …. could amount…
whether a _ act might amount to _ ___ was considered again in __ case
here the SC decision confirmed that it is…. to amount to …
BUT made it clear that such …. in the context of …
if threat is made for illegitimate ends, then it is made in bad faith, and will almost inevitably lead to a finding of duress.
Carillion and Atlas - threats were made to extort money from other party that they weren’t entitled to
no legitimate basis for the demand - duress
DSND - pressure was found to be exerted in good faith- until safety of divers was clarified - not illegitimate pressure, but reasonable behaviour by a contractor acting bona fide
a fine one
lawful threat can amount to legitimate pressure and duress finding = contentious
Cash & Carry v Gallaher - court considered that a lawful act might amount to illegitmate pressure
coercive but not improper a means of getting money they honestly believed was due to them, and not as means of extorting £ they knew not to be due
but had threat not been made in good faith, court prepared to find that the lawful act (witholding credit) could amount to illegitimate pressure
lawful act could amount to illegitimate pressure - Pakistan International Airline V Times Travel
SC decision confirmed possible for lawful act to amount to illegitimate pressure
but made it clear that such a finding will be v rare in the context of a commercial negotation
(Contract - Duress & Economic Duress) - Economic Duress Elements
Ilegitimate Pressure
Scenario - A transports goods for B at agreed price, cost of petrol rises making it more difficult for A to do so, but on above reasoning, if A seeks to renegotiate contract under threat of breaching it then ….
seems ___ and that A’s conduct should not…
BUT commercial reality is that.. like… or… when entering…
= part of the …
and if A does not want to take this risk , then.. x3
A risks contract being unenforceable due to duress.
seems harsh & that a’s conduct should not amount to illegitimate pressure
but commercial reality = contracting parties are expected to consider risks - like changes in cost of material/ labour - when entering into a contract
bargain that they enter into = accept this risk
can enter into a shorter contract (reduces risk) , none at all, or incl a price escalation clause
(Contract - Duress & Economic Duress) - Economic Duress Elements
Ilegitimate Pressure
Factor 3 to consider - Did the Victim protest?
the victim should demonstrate…
i.e. in Carillion …- and this was…
VS in (Case) - here, while the threat …. was…., the claim ___because…
they also …
→ so there is ___ for the victim - cannot protest…. but if they fail…
evidence of protest at the time the alleged duress was exerted
Carillion - wrote letter of protest against demand = material in claim succeeding
North Ocean Shipping v Hyundai Construction - threat to breach contract was illegitimate but claim failed bc failed to protest at the threatened breach
also waited 8 months later to claim c
→ victim cant protest too much else breach might materialise but also if fail to protest - failure may be taken as acquisience
(Contract - Duress & Economic Duress) - Economic Duress Elements
illegitimate Pressure
Factor 4 to consider - Did the victim affirm?
authority - one of the principal reasons that Vs/Cs unable to plead duress = because they…
it was not until… that…
while it was suggested that…. because they were concerned about …. - this fear was…
Held - although the agreement… might have … the fact of the …. mean that they had… to have…
in effect, they had …
North ocean shipping - they delayed in taking action to set aside the contract
not until 8 months later did they claim return of extra %
while suggested that they didnt seek return of money sooner bc concerned about another delivery/ building of ship, ithis fear was found to be groundless
altho agreement to pay extra money might have initially been voidable for economic duress - the fact of 8 month wait until claiming/ steps to avoid the contract taken meant lost their right to have new contact for increased payments set aside
affirmed a variation to the contract.
(Contract - Duress & Economic Duress) - Economic Duress Elements
Significant Cause
to succeed in establishing ED, it must be shown that…
authority - it is a __ __ test
the illegitimate pressure must… so that it would not… / or at least in…
so the pressure must…
In contrast to duress to the person - causation aspect here - duress will be estd. if … it need not…
the agreement would not have been entered into, if there had not been the duress
Huyton SA v Peter Cremer - but for test
have actually caused the making of the agreement, so that it would otherwise not have been made at all / at least in the terms it was made
so the pressure must have been decisive or clinching
duress is one factor in influencing the behaviour, it need not be decisive
(Contract - Capacity) - Economic Duress
Parties can agree to __ a contract - replace … with …
Variation will only be effective if…
A common situation here =…
If the other party agrees to this then…
BUT..
Is that variation…
there is an …i.e… example situation
Is the variation…
Vary a contract- replace old set of terms, with a new set
Supported w an agreement, and consideraiton tc.
Parties have entered into contract, one wants to change terms to make them more favourable to it, i.e. recieve more money, and states wont perfom existing obligs unless it recieves this
The parties might have agreed to vary that contract
But 2 issues arise:
Is that variation to pay more supported by Consideration?
important relationship between ED and consideration i.e. contract renegotiated to persuade party to pay more for a good/ service provided by another party
Is the variation the result of improper pressure/ ED?
(Contract - Capacity) - Economic Duress
Variation
in order to est. whether a variation i.e. a promise to pay more is .___ - the variation must… (x3)
consideration - if a party does…., there is no…. to … or as it lacks _
authority
BUT if a party does …. then it may…
authority
& if so then the variation may…, provided there is also…
also court are willing to look imaginatively at consideration - identifying a __ )_ as _ _ in (authority)
BUT of course even where such __ _ exists, the promise wont… where duress has… to extract…
whether variation is binding - variation must demonstrate all the characteristics of a valid contract
agreement
consideration
ITCLR
consideration - if a party does no more than it was already bound to do, there is no consideration to make the variation binding / enforceable as it lacks consideration
Stilk v Myrick
does something above and beyond its orig contractual obligations, it may amount to good consideration
Hartley v Ponsonby
then variation may be enforceable - provided also agreement and ITCLR
practical benefit as good consideration in Williams v Roffery Bros
but even where PB exists, promise wont be enforceable where duress has been exercised to extract the promise to pay more
(Contract - Duress & Undue Influence)
The Legal Effect of Duress
A person who enters a contract under duress has…
This results in the contract being… - meaning whilst… The party subject…. May….
Authority - confirmed that…
The remedy for a voidable contract = ___
Involves attempting to…
Voidable means -
Remedy of recession may be lost where…
& court might conclude that a contract is affirmed if, after…., the innocent party…
Not done so under their own free will
Voidable - whilst it remains in force unless some Action is taken, Party subject do duress may choose to avoid the contract after the duress has ceased
Pao on v Lau Yiu Long - effect of duress is to make the contract voidable
Rescission
Attempts to return the parties to the situation they were in before contract was entered into
Contract remains in force unless some action is taken to void it/ annul it
The contract is affirmed - will act as a bar to rescission
If after duress has ceased, the innocent party fails to challenge the contract/ its actions ., in a timely way
(Contract- Duress & Undue Influence) - Undue Influence
if the consent to a transaction was…. as the …, then the transaction…
authority (leading case)
objective = to ensure that…
How many types? & what are they
acts of … or … (i.e. __ __)
__ of _ /_ of - of which …
A common situation = … wants their… with the effect that… for the…
If the business… , even though…
If the business owner i.e…. - it could … (they ___ their __ etc.)
if consent to a transaction was produced in a way such that the content ought not fairly to be treated as the expression of a free person’s will, then the transaction will not be allowed to stand
RBS v Etridge
influence of one person over another is not abused
2 types of UI :
Overt acts of improper pressure or coercion (i.e. unlawful threats)
Relationship of influence/ ascendancy - of which unfair advantage is taken.
Husband/ wife (business owner) wants spouse to enter into an agreement w effect thart spouse’s share in family home used as secuirty for loan for business owners business
If business suffers, spouse might lose their interest in the home, even tho dont own the business
If business owner i.e. misrepresented the business/ nature of transaction - could amount to undue influence (abused trust etc)
(Contract - Duress & Undue Influence) - Undue Influence
Situation where husband/ wife (Business Owner - BO) wants their spouse to enter into agreement w effect that their share in matrimonial/ family home used as security for business loan
This is a … - the BO is not… but encouraging… With the __
Undue influence doesnt…
But if not, how…
3 party situation - BO is not encouraging spouse to enter into a transaction w themselves bUT → encouraging spouse to enter into a transaction w the bank
Come from the bank , from BO - difficulty
Do we protect spouse
=undue influence & 3rd parties difficulties
(Contract - Duress & Undue Influence) - Undue Influence
Leading case - here court stated that UI exists where…. in a way such that…., as the …
in this case, the court set out… (x2)
RBS v Etridge (No 2) - exists where a person’s consent to a transaction was produced in a way such that the consent ought not fairly to be treated as the expression of their free will
2 types of UI
instances of overt acts of improper pressure or coercion
i.e. unlawful threats
(overlap w duress)
situations where one party have influence/ ascendancy over the other
and party takes advantage of this
i.e. relationships
quite distinct from duress
(Contract - Duress & Undue Influence) - Undue Influence
Type 1 - Overt acts of improper pressure or coercion
these cases are… - most today would probably …
in cases re deceiftul/ fraudulent behaviour constituting UI - the causation test is….
it is necessary ….
If the behaviour is not…., then the situation is …
it may be that… - aka …
rare - most would probs be decided as duress today
causation test is same as duress to the person
necessary only for innocent party to est. that the UI is a factor in inducing the C to enter into the contract - doesnt need to be decisive
if behaivour is not deceitful/ fraudulent then situation is les clear
may be that the but for test applies - aka but for the behaviour constituting UI, would the innocent party have entered into thee contract ?
(Contract - Duress & Undue Influence) - Undue Influence
Type 2 - Taking advantage of influence / ascendancy in a relationship
this type is …
aka the … covered above & importantly note the …
there is no…
commonly the influence will come from…
but a relationship where… - might also allow the …., even if the innocent…
there are also a ..__ relationships where…
aka the court will not allow…
these relationships include… (x5)
BUT crucially… do NOT.. - therefore the influence…
& note that it is not…, it is only where… , that there will..
i.e. because…. or simply…
more common
business owner & spouse scenario - note the absence of a specific act of coercion/ or pressure.
definitive list of relationships of ascendancy/ influence
the trust and confidence one party has in another
where one party is v vulnerable/ dependent - might also allow other party to have sig influence, even if innocent party hasnt postively placed trust/ confidence in the other party.
no. relationships where there is an irrebutable presumption that one party has influence over the other
court won’t allow any argument that there was no influence in that relationship
incl parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and doctor and patient
parent and adult child, or husband and wife do NOT give rise to this presumption - the influence needs to be positively shown
note - it is not every transaction betw parties to such a relationship that gives rise to UI
it is only where the relationship is taken advantage of that there will be UI
i.e. bc they have decieved the innocent party or simply taken a decision entirely in its own interests
(Contract - Duress & Undue Influence) - Undue Influence & 3rd Parties
a contract can be affected by…
in past, UI largely … to where… because the other… due to their ___
BUT sometimes, particulalrly … ,a victim is persuaded to … , on the basis of … / -… / or … - not by the (who is …), but by … i.e. their _
if the ___ party (i.e. the bank) has …/ is __, of the …, then the …
but it is… that the bank…
it is much more likely that there will be … which might.. that a transaction carries…
the Q is when will… - aka when will it …
undue influence from a 3rd party
confined to where a Victim tryign to avoid transaction bc other party exerted UI over them due to their relationship
sometimes, particularly in context of marital relationship, a V is persuaded to enter into a contract w bank/ other creditor - on basis of some UI. misrep or other legal wrong, not by the bank/ creditor (other party to contract), but by some 3rd party - i.e. their spouse
if the contracting party i.e. the bank has actual notice / i.e. is aware of the UI, the contract will be affected
but highly unlikley that the bank will have actual notice of the UI
more likely that there will be circumstances which might lead a bank to realise that a transaction carries real risk of UI
when will the bank be fixed w constructive notice of the UI - when will bank be treated as having notice of sometthng that it is not actually aware of.
(Contract - Duress & UI) - Undue influence & Third Parties
note - the court has indicated that, in the majority of cases, a…as security for… is not…
so it will be for the spouse…., to show more explicitly…
note it is only if…, that the issue of … will be …
case considering spouses and bank issue
Mr OB was … and wanted…
the bank… and the _ was to be _ by a .. - jointly owned..
the bank gave instructions for x3
but the bank staff… and so …
debts increased… and the bank…
Mrs OB/ the wife contended that… x2
HL held that the bank… and as such were…
& the bank had ..in entering into…
nor had the bank…
SO the bankw as fixed with… made by …
and therefore the wife was…
a spouse offering their interest in the matrimonial home as security for a loan for their spouse’s business is not a transaction which requires an explanation
so it will be for spouse offering security to show more explicitly how their spouse’s influence has been used unduly
only if UI is estd, will issue of notice of the bank be relevant
barclays bank plc v o’brien
Mr OB was shareholder in company, and wanted to increase overdraft
bank agreed - and loan to be secured by a 2nd charge over the matrimonial home - jointly owned by MR OB and wife
bank instructions that legal charge be signed by both mr OB and wife, guarantee signed by mr OB and instructed both mr OB and wife should be made aware of the nature of the transactions & if they had any doubts to obtain independent advice.
bank staff hadnt followed instructions and both mr OB and wife signed docs without reading them
debts increased beyond agreed limits, bank took proceedings to enforce its secuirty
wife contended that 1. her husband had put undue pressure on her to sign the agreements, and 2. husband mirepresented the effect of the legal charge - she thought limited to £60k sum. actually over £10k
banka ware parties were husband and wife, and as such were put on notice that influence may be exercised
had failed in its duty to take reasonable steps to warn the wife of the risks she ran in entering into the contract
nor had the bank properly advised her to seek independent legal advice
SO the bank was fixed w constructive notice of the mirsrrep made by the husband to induce his wife into contract
AND SO wife was entitled to have the legal charge set aside.
(Contract - Duress and UI) - Undue Influence by 3rd Parties
Barclays Bank Plc v o’Brien
it was held that a creditor would be _ on _ when… offers… for… by the ..
the transaction is …
there is a … that in…., the husband has… that entitles…
SO unless the creditor who…, takes… to .. that the … has been, the creditor…
creditor would be put on notice when wife offers to stand surety for her husband’s debts by the combination of 2 factors:
transaction is on its face not to the financial advantage of the wife, and
there is a substantial risk in transactions of that kind that, in procuring the wife to act as surety, the husband has committed a legal / equitable wrong that entitles the wife to set aside the transaction
so unless creditor who is put on inquiry takes reasonable steps to satisfy himself that the wife’s agreement to stand surety has been properly obtained , the creditor will have constructive notice of the wife’s rights.
(Contract - Duress & Undue Influence) - Undue Influence and third parties
Post O’Brien developments in surety transactions
HL once more asked to consider this area of law … (case)
not only did this case and/ or many authorities in this area
also the principles of _ _ beyond …
judge said the only … is to regard.. in… where…. is …
to clarify, where one party … is standing as..
this confirmed the approach in __ case
here the husband used… , and lost…
the wife sought to have the … on the grounds of… , havign signed it without …, under…
HL… - because the husband… and the lender had…
as the mortgage applic… - there was … other than… for the …
in RBS v Etridge (No 2)
clarify & approve
extended principles of constructive notice beyond cases of spouses
only practical way forward is to regard banks as put on inquiry in every case where the relationship between surety and debtor is non-commercial
when one party in a non-commercial setting is standing as surety for other party
CIBC Mortgages plc v Pitt
husband used borrowed money on stock market, lost everything in the crash
have mortgage over matrimonial home set aside on grounds of UI, having signed it wihtout reading it under pressure from her husband
HL rejected wife’s claim - bc husband had not been acting as the lender’s agent and lender had no actual/ contructive notice of the husband’s UI
mortgage applic said loan was for a holiday cottage - so nothing to put lender on tnoice that transaction was anything other than a normal advance for the couple’s joint benefit..
(Contract - Duress & Undue Inlfuence) - UI and 3rd parties
What are reasonable steps?
the purpose is to ensure… and advise them to…
case
there is no obligation …. to… as it is … from a … that they have… , unless the creditor is …
& it is for … there is a … if the …
the creditor must … with … about … for the solicitor…
if the creditor is …, either __/ _ that the wife.., then the creditor must…
purpose is to ensure innocent party is fully aware of the risks being taken, and advise him/ her to take independent advice
etridge
no oblig on creditor to have seen the wife itself as it is ordinarily reasonable to rely on confirmation from a solicitor that they have advised the wife in an appropriate manner - unless creditor is aware that this has not been done
& it is for solciior to determine whether there is a conflcit of interest - if the wife’ solicitor also advises the husband
creditor must provide solicitor w suff infor about the transaction for the solicitor to be able to explain it fully to the wife
if creditor is aware, either actually or constructively that the wife may have been misled, then the creditor must tell the solicitor of this
(Contract - Duress & UI) - UI and third parties
the solicitor’s position
case - the solicitor should start by … that his …. by the .. to counter… / or …
if the wife then … , the core minimum the advice should contain is: x3
an explanation of … and …, incl…
the __ of the risk, incl… and the…
the fact that …
the solicitor should then…
if the solicitor fails… then she will…, but she will have …. who is entitled… has…
etridge - solicitor should start by warning wife that his involvement may be relied upon by bank to counter allegations that she could not properly understand the transaction/ had given her consent to it
if wife then consents to legal advice being given, the core minimum the advice should contain is:
an explanation of the docs & their practical consequences, incl risk that wife may lose her home
seriousness of the risk , incl duration and terms of the security, and the wife’s assets and means,
the fact that the wife has a choice
then obtain any necessary info from the lender/ creditor
if solicitor fails in duty to the wife, then she will have an action in negligence against the solicitor, but will have no recourse to the lender/ creditor - who is entitled to assume that the solicitor has properly advised the wife
(Contract - Terms)
the terms of a contract are … - they …
a cotnract can have terms agreed… , or.., or …
terms of a contract may be or _
E__ terms = things that have …, by which …
I__ terms = things that have not…but…
a statement can be 3 things & conseq../ then…
are its contents - they define the rights and obligs arising from the contract
agreed in writing, agreed orally, or a mixture of the two
express or implied
express terms - have been communicated betw the parties, by which they intend to be bound
implied terms - terms that have not been communicated betw the parties but nonetheless the law deems that they exist
statements can be:
a representation (then possible action in misrepresentation),
an express term (assess whether a term is breached),
or mere puff (no legal effect)