2015 June L4 U1 SA Final Word (PDF For Web) PDF
2015 June L4 U1 SA Final Word (PDF For Web) PDF
2015 June L4 U1 SA Final Word (PDF For Web) PDF
The purpose of the suggested answers is to provide students and tutors with
guidance as to the key points students should have included in their answers to
the June 2015 examinations. The suggested answers do not for all questions set
out all the points which students may have included in their responses to the
questions. Students will have received credit, where applicable, for other points
not addressed by the suggested answers.
Students and tutors should review the suggested answers in conjunction with the
question papers and the Chief Examiners’ reports which provide feedback on
student performance in the examination.
SECTION A
4. Only those who are party to a contract are bound by it and may benefit
from it. This was demonstrated in the case of Tweddle v Atkinson (1861).
5. Terms of a contract are those things which become part of a contract while
representations (statements of fact or opinion) do not. When deciding if a
statement is intended to be a term of the contract, the court will take a
number of factors into account.
If the person to whom the statement is made has made it known that he
attaches particular importance to a certain fact and the other party then
states that fact is true, it is likely that the statement will be treated as a
contractual term. This was demonstrated in the case of Bannerman v
White (1861).
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If the person making the statement suggests that the other party should
check it, the statement won’t be treated as a term of the contract. This
was demonstrated in the case of Ecay v Godfrey (1947).
If the maker of the statement does so in a way which implies that he has
special knowledge which will dissuade the other party from checking, the
statement will probably be held to be a contractual term. This was
demonstrated in the case of Schawel v Reade (1913).
It may also be held to be a term where the maker of the statement has
some special knowledge or skill compared with the other party. The
reverse also holds true, i.e. if the person to whom the statement is made
has greater knowledge or skill then it may not be a term. This was
demonstrated in the cases of Oscar Chess Ltd v Williams (1957) and Dick
Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965).
6. This test was established in the case of The Moorcock (1889). The courts
will imply a term into the contract to give the contract what is referred to
as 'business efficacy', i.e. they will imply a term into the contract to make
it workable between the parties so as to reflect their intent.
10. Non-pecuniary loss refers to those losses which are not easily quantifiable
in monetary terms. Examples of non-pecuniary losses include distress,
disappointment and physical inconvenience.
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SECTION B
Scenario 1 Questions
2. (a) The Sale of Goods Act 1979, as amended by the Sale and Supply of
Goods Act 1994, implies certain terms into all contracts for the sale of
goods.
Section 13 of the Sale of Goods Act 1979, implies a term that states
when goods are sold by description they will correspond with any
description by which they have been sold. This was demonstrated in
the case of Beale v Taylor (1967), which concerned a car sold under a
false description.
Jake specifically asked for yellow roses to be delivered. The roses that
were delivered were red. This is a breach of s.13 of the Sale of Goods
Act 1979 and Jake can reject the contract and/or claim damages for
breach of an implied term.
Only those people who are a party to a contract are bound by it. This
is known as privity of contract and was demonstrated in the case of
Tweddle v Atkinson (1861).
Lorna's roses were purchased for her as a gift by her brother Jake;
therefore she is not a party to the contract. At common law, Lorna
has no right of action under the contract. However, the Contracts
(Rights of Third Parties) Act 1999 provides that a person who is not a
party to a contract may enforce rights under it if certain conditions
are met. Under s.1(1)(a), a third party may enforce contractual terms
if the contract expressly states that the third party is to have a right
to enforce or, alternatively, under s.1(1)(b), where the third party is
identified in the contract and the term purports to confer a benefit on
the third party.
(b) Section 14(2) of the Sale of Goods Act implies a term that goods sold
in the course of a business will be of satisfactory quality. Satisfactory
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quality is determined by a number of factors including, e.g.,
durability, freedom from minor defects, etc. This was demonstrated
in the case of Grant v Australian Knitting Mills (1936), in which a
garment contained a chemical that caused skin irritation.
Jemima was under pressure because the wedding, for which she was
contracted to arrange the flowers, was due to take place the next day. She
did attempt to find another supplier but was unable to do so at such short
notice. She had no real choice but to pay the additional sum demanded.
Jemima will be entitled to reclaim the additional £700 which she paid to
PL.
4. A person in breach of contract will only normally be liable for losses which
would arise naturally 'according to the usual course of things' from the
breach or loss 'as may reasonably be supposed to have been in the
contemplation' of the parties at the time when the contract was made.
Other losses will be considered to be too remote. This was established in
the case of Hadley v Baxendale (1854), in which the delay in delivery of a
crankshaft led to a loss of profits. The consequence of the delay was
unknown to the defendants.
Jemima may claim for the delay in delivery but not any additional loss
unless the contract with Nerys had been in the contemplation of Special
Blooms Ltd in which case they would be liable for special damages.
Scenario 2 Questions
1. (a) In order for there to be a valid contract, the parties to it must intend
that the agreement will be legally binding. When considering the
question of intention, the courts use presumptions which may be
rebutted by evidence to the contrary.
(b) Niall and Myrtle have entered into a legally binding contract. Niall has
made an offer which Myrtle has accepted. Where one party makes it
known to the other that he does not intend to fulfil his obligations
under the terms of the contract, it is known as an anticipatory
breach. Where such a breach occurs, the other party can sue for
breach straight away. It is not necessary to wait until performance
falls due. This was demonstrated in the case of Hochester v de la
Tour (1853), in which a tour operator dispensed with the services of a
courier prior to the courier's agreed start date. The courier was able
to sue immediately and claim damages.
Niall has indicated that he does not intend to fulfil his obligations
under the terms of the contract. Myrtle need not wait until 1 July to
sue for breach.
SelfWrite has made an untrue statement of fact by telling Niall that it has
assisted hundreds of writers, many of whom have gone on to become
best-selling authors. Niall was induced to enter the contract by this
statement.
SelfWrite is a new company and has published work by only ten authors. It
is aware that their statement to Niall is false. This amounts to fraudulent
misrepresentation. Niall is entitled to rescind the contract and claim
damages.
4. If, after a contract is made, something happens which is not the fault of
either party but which makes the contract impossible to perform, it is said
to be frustrated. In the case of Taylor v Caldwell (1863) a contract for the
hire of a concert hall was frustrated when the hall burnt down, making it
impossible for the concerts to go ahead. A contract may also be frustrated
by a radical change of circumstances: Davis Contractors v Fareham UDC
(1956).
A contract may be frustrated if either party falls ill provided that the non-
availability substantially affects the performance. This was demonstrated
in the case of Condor v The Barron Knights (1966), in which a member of
band was unable to perform due to illness.
Edmund has broken his wrist which renders him unable to perform at
Niall's book launch. Under s.1(2) of the Law Reform (Frustrated Contracts)
Act 1943, Niall can recover the £100 he paid in advance of Edmund's
performance.
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