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Contents
- Preliminary Material
- Main Text
- Part I Fundamentals
- Preliminary Material
- 1 Sources and General Features
- Sources and Categories of Contract Law
- ‘The General Part’ of Contract Law
- ‘Equity’: The Distinction between Common Law and Equity
- The Nature of Consensus or Agreement
- Modern Developments in English Contract Law
- Introduction.
- Statutory Control of Exclusion Clauses and Unfair Consumer Terms.
- Third Party Rights of Action.
- Interpretation of Contracts.
- Breach of Contract and Classification of Terms.
- Variation Agreements and the Doctrine of Consideration.
- Economic Duress.
- Other Changes.
- False Starts and Partial Successes.
- Doctrinal Controversies: Evaluation
- 2 Principles
- Freedom of Contract
- Objectivity
- Nature.
- Pervasive Application.
- Rationale for Objective Principle.
- Test One: ‘Fly-on-the-Wall’: Neutral Objectivity.
- Test Two: Objectivity from the Representee’s Perspective.
- True State of Affairs Perceived by Party: Objective Appearance Not Determinative.
- Objective Principle Qualified: Bad Faith Failure to Point Out Special Types of Mistake (‘Snapping Up’).
- Undisclosed Principal.
- Proof of an Oral Contract: Objectivity Supplemented by Subjective Evidence.
- The Contractual Bond Principle
- Estoppel
- Good Faith and Fair Dealing
- The Compensation Principle
- Part II Formation
- Preliminary Material
- 3 Agreement
- Formation of Contracts: Outline
- 3.01
- Objectivity.
- Offer and Acceptance.
- Offers and Invitations to Treat.
- Advertisements, etc.
- Offerees.
- Offer Mistakenly Made.
- Party Aware of Other Party’s Mistake as to Terms.
- Party’s Error as to Subject-matter Induced by Other Party.
- Counter-offers.
- Offer Revoked by Offeror.
- Offer Rejected by Offeree.
- Offer Lapsing.
- Need for Acceptance to be Communicated.
- Silence.
- Conduct.
- Timing of Acceptance.
- Acceptance by Post.
- The Battle of the Forms.
- Unilateral Contracts.
- Consumers: Cooling-Off Periods.
- Unjust Enrichment: Restitutionary Awards for Goods or Services: No Contract Found
- Total Failure of Consideration: Recovery of Money Paid: No Contract Found
- ‘Subject to Contract’
- Competitive Bidding: Tenders, Auctions, and Sealed Bids
- Invitations to Treat
- Offer and Acceptance
- Formation and Multipartite Contracts
- Receipt and Offeree’s Awareness of Offer
- Offer Revoked: Direct and Indirect Revocation
- Offer Lapsing or Rejected
- General Need for Acceptance to be Communicated
- Prescribed Method of Acceptance
- Acceptance by E-mail etc (Not by Ordinary Post)
- Need for Communication of Acceptance.
- E-mail Available to be Read Test in Ordinary Working Hours.
- Acceptance Received at Offeror’s Business Premises During Ordinary Working Hours (Other than by Royal Mail).
- Converse Situation: Acceptance Received Outside Offeror’s Ordinary Working Hours (Other than by Royal Mail).
- Evaluation: E-mailed Acceptance: ‘24/7’ Unlimited Accessibility?
- Service in General.
- ‘Postal Rule’: Acceptance by Royal Mail
- Unilateral Contracts
- Acceptance by Conduct
- Acceptance by Silence: In General Not Possible
- Offeree Aware of Price Error: ‘Snapping Up’
- Mistaken Acceptance Induced by Offeror’s Confusing Arrangements
- Battle of the Forms
- Formation of Contracts: Outline
- 4 Certainty
- Commercial Arrangements and Certainty
- Eight Instances of Sufficient Certainty
- (1) Negotiation Exclusivity for Fixed Duration.
- (2) Airport Franchise: Airline Bound.
- (3) Another Airport Franchise: Airport’s Responsibility.
- (4) Bonus Pay Offer.
- (5) Hire Charge Subject to Variation.
- (6) Publisher’s Telephone Assurance to Author.
- (7) Settlement Agreement with Minor Loose-Ends.
- (8) ‘Find Me a Purchaser’: Estate Agency Contract Sufficiently Clear.
- Five Instances of Transactions Void for Uncertainty
- Duties to Try to Obtain Planning Permission, etc
- Negotiation or Mediation Agreements
- Pre-Formation Negotiation Obligations.
- Evaluation: Pre-formation Negotiation Agreements: Walford v Miles.
- Settlement Valid Despite Offeror’s Manifest Blind Spot.
- Negotiation Agreements and Dispute-Resolution Clauses.
- Evaluation: Negotiation Agreements and Dispute-Resolution Clauses.
- Post-Formation Negotiation Obligations.
- Mediation Agreements.
- Third Party Valuation
- Sale of Goods: Agreement to Agree Price
- 5 Formality
- 6 Consideration
- Consideration Doctrine: Formation
- Introduction.
- Main Elements of the Consideration Doctrine.
- 6.06
- (1) Requested Detriment Incurred or Benefit Conferred.
- (2) No Testing of the Adequacy of Consideration: Nominal Consideration.
- (3) Further Requirement of an Intent to Create Legal Relations.
- (4) Formation and Variation and Consensual Discharge.
- (5) Past Consideration.
- (6) Pre-existing Duty.
- (7) Pre-existing Commitment to Third Party.
- (8) Variation (1): ‘Increasing (or Ameliorative) Pact’.
- (9) Variation (2): ‘Decreasing (or Forbearance) Pact’.
- Consideration’s Branches Lopped but Trunk Intact.
- Detriment or Benefit as Elements of Consideration: Two Illustrations.
- No Testing of the Adequacy of Consideration.
- Evaluation: Consideration as a Test for Formation of Contract.
- Past Consideration Rule.
- Requested Performance and Binding Subsequent Promise.
- Evaluation: the Past Consideration Rule.
- Pre-Existing Statutory or Public Duty.
- Consideration and Variation (1): Promises to Pay More
- Consideration and Variation (2): Promises to Reduce Debts or Give More Time
- The Rule in Pinnel’s Case.
- Affirmations of Rule.
- Leading 1884 Decision.
- Cheque Payment Not Fresh Consideration.
- Genuinely Dispute Claim.
- Promise to Give Debtor More Time: Creditor’s Commercial Advantages.
- Promissory Estoppel and Creditors’ Rights.
- Evaluation of the Rule in Pinnel’s Case: Decreasing or Forbearance Pacts.
- Third Party Payment to Creditor.
- Consideration Doctrine: Formation
- 7 Intent to Create Legal Relations
- Outline
- Evaluation
- Presumed Unenforceability: Family Relations
- Commercial Deals: Presumption of Legal Enforceability
- Presumption of Legal Enforceability.
- Other Cases.
- Intent to Create Legal Relations and the Objective Principle.
- Barrister’s Fees.
- Surrogacy Arrangements.
- Enforceability: Bankers’ Bonus Promises.
- Matter of Honour: ‘Gentlemen’s Agreements’.
- ‘Letter of Intent’: Need to Construe.
- ‘Letter of Comfort’.
- The Semantic Niceties of Contractual Commitment.
- Absence of Any Promise or Contractual Commitment.
- Absence of an ‘Apparent Promise’: No Long-Term Supply Agreement: Series of Separate Transactions.
- Borderline Unenforceability (1): Royalties: Members of a Band.
- Borderline Unenforceability (2): Tycoon’s Drinking ‘Banter’.
- Borderline Unenforceability (3): Methodist Ministry.
- Borderline Unenforceability (4): Golfing Prize.
- Borderline Enforceability (1): Property in Return for Care Services.
- Borderline Enforceability (2): Petrol-Sharing: Reimbursement Duty.
- Borderline Enforceability (3): Sharing the Winnings of a Competition or Lottery Entry.
- Borderline Enforceability (4): Elite Athlete and the Organizing Committee.
- Borderline Enforceability (5): Loss of Chance Damages: Football Transfer Negotiations.
- Part III Capacity and Parties
- Preliminary Material
- 8 Capacity
- 9 Third Parties and Co-Parties
- Damages Normally Confined to Promisee’s Personal Loss
- Building Contract Exception to ‘Promisee Loss Only’ Compensation Rule
- Promisee Obtaining Specific Performance to Compel Payments to the Third Party
- Third Party Rights and Claims: Outline and Evaluation
- The Common Law Privity Doctrine
- Equitable Protection of Third Parties: Trusts of Promises
- The Contracts (Rights of Third Parties) Act 1999: Positive Rights of Action
- Summary.
- Identification of the Third Party under the Contracts (Rights of Third Parties) Act 1999.
- Implied Right of Action under the Contracts (Rights of Third Parties) Act 1999.
- Two-Step Test under ‘limb two’ of the Contracts (Rights of Third Parties) Act 1999.
- Two Examples of No Implied Direct Right of Action Arising.
- Nature of a ‘Benefit’ under ‘limb two’ of the Contracts (Rights of Third Parties) Act 1999.
- Arbitration Clauses and Third Party Claims under the Contracts (Rights of Third Parties) Act 1999.
- Variation or Rescission of the Contract under the Contracts (Rights of Third Parties) Act 1999.
- Common Law Rights of Promisee Preserved under the Contracts (Rights of Third Parties) Act 1999.
- Right of Defence or Set-off Based on Relations between A and T.
- Right of Defence or Set-off Based on Relations between A and B.
- Rule Excluding ‘Double Compensation’ under the Contracts (Rights of Third Parties) Act 1999.
- Parties Agreeing to Exclude the Contracts (Rights of Third Parties) Act 1999.
- Third Parties Gaining Protection from Exclusion Clauses
- Privity of Contract and ‘Burdens’
- General Principle.
- Procurement of a Breach of Contract and Unlawful Interference with Another’s Contract.
- Restrictive Covenants Affecting Land.
- Injunction to Prevent Knowing Interference with Contractual Rights in Other Types of Property, especially Goods.
- Bailment of Goods ‘on Terms’.
- Nature of Bailment.
- Joint Obligations
- 10 Assignment and Agency
- Assignment: Outline
- Modes of Assignment
- Extent of the Assigned Right
- Non-Assignable Rights
- Assignment Distinguished from Other Doctrines
- Agency: Outline
- Actual Authority
- Apparent or Ostensible Authority
- Ratification
- Anomalous Category of ‘Usual Authority’: Watteau v Fenwick (1893)
- Undisclosed Principal
- Implied Warranty of Authority
- Further Aspects of Consensual Agency
- Agency of Necessity
- Part IV Vitiation
- Preliminary Material
- 11 Misrepresentation
- Outline
- Fundamental Elements of a Misrepresentation
- Definition.
- Pre-Formation False Statement or Representation by Conduct: Element (1) of a Misrepresentation.
- Inaccuracy.
- Misrepresentation can be Verbal or by Conduct.
- Conduct: Nods, Winks, etc.
- Representation Endures Until Formation.
- Supervening Falsification Known to the Representor.
- Evaluation: Supervening Falsification.
- Apt to Mislead: Element (2) of a Misrepresentation.
- ‘Mere Puffs’: Incredible Statements: ‘It Will Never Rain’; ‘Prices Will Never Fall’.
- The Representee Receives the Inaccurate Information: Element (3) of a Misrepresentation.
- Reliance on the Misrepresentation; Element (4) of a Misrepresentation.
- Matters of Opinion
- Routes to Rescission
- Bars to Rescission for Misrepresentation
- 11.74
- (1) Affirmation by the Representee.
- (2) Acquiescence, Laches, and Prejudicial Lapse of Time.
- (3) Inability to Restore the Parties to the Original Position.
- (4) Intervening Third Party Rights: Notably, Purchase of the Subject-matter by a Bona Fide Purchaser for Value without Notice.
- Non-fraudulent Misrepresentation: Statutory Discretionary Bar under Section 2(2) of the 1967 Act.
- Monetary Adjustment During Rescission
- Tort Damages for Loss of Income
- Compensation for Lost Revenue from Investment or Business Venture.
- Tort Damages to Compensate for Less Profitable Contractual Terms.
- Tort Damages for Having Failed to Acquire a Better Alternative Business and Investment.
- Damages for the Full Extent of Investment Losses.
- Tort Damages: Inevitable Loss? Burden of Proof.
- Damages under Section 2(1) of the Misrepresentation Act 1967
- Nature.
- Section 2(1) of the Misrepresentation Act 1967 (1): Claimant’s First Advantage: The Burden of Proof.
- ‘Reasonable Ground’: an Objective Inquiry.
- Section 2(1) of the Misrepresentation Act 1967 (2): Claimant’s Second Advantage: The Fiction of Fraud.
- Evaluation: ‘Fiction of Fraud’ and the 1967 Act.
- Section 2(1) Damages Claims and the Defence of Contributory Negligence.
- Other Points Concerning Contributory Negligence and the Misrepresentation Act 1967.
- The Torts of Deceit and Negligent Misstatement
- The Need for Dishonesty.
- Reliance in the Context of Deceit.
- Evaluation: the Zurich Case, Bogus Claims, and the Categories of Vitiation.
- Obtaining Damages for Deceit.
- The Path to Rescission of the Settlement.
- Common Law Rule Barring Exclusion of Liability for Fraud.
- The Hedley Byrne Principle: the Tort of Negligent Misstatement.
- Misrepresentation and Exclusion Clauses
- Common Law Rule Barring Exclusion of Liability for Fraud.
- Contractual Estoppel: Inability to Override Historic Misrepresentation.
- Misrepresentation and the Statutory Reasonableness Test: Three Types of Clause Covered by Section 3(1) of the Misrepresentation Act 1967.
- ‘No Representation Made’ Clause.
- ‘Mere Opinion’ Clause or Made ‘Without Responsibility’.
- ‘Non-reliance’ Clause.
- Entire Agreement Clauses are Prima Facie Not Subject to Statutory Reasonableness Test.
- Scope of Agency Clause Not Subject to the Statutory Reasonableness Test.
- Non-contractual Relationship.
- Misrepresentation: Statutory Reasonableness Test Determinations. Exclusion of Liability for Oral Representations in Conveyancing Context: Exclusion Not Unreasonable.
- Exclusion of Rescission for Non-fraudulent Misrepresentation in Conveyancing Context: Exclusion Unreasonable.
- Misrepresentation and Exclusion Clauses in Consumer Contracts.
- Exceptional Duties to Disclose
- No General Duty.
- Exceptional Duties to Disclose.
- Commercial Insurance: Insurer: No Disclosure Duty.
- Commercial or Consumer Insured: Disclosure Duty.
- 12 Mistake
- Outline
- Shared Mistake at Common Law
- Leading Case.
- Impossibility Criterion.
- Survival of ‘Essential Difference’ Test.
- Implied Term Theory of Mistake: Requiescat in Pace?
- Case Law Examples of Shared Mistake
- No Parallel Equitable Doctrine of Shared Mistake.
- Responses to the Solle v Butcher Issue in Other Jurisdictions.
- Equitable Doctrine of Mistake concerning Voluntary Instruments.
- ‘Non Est Factum’: Documents Signed Under Complete Misapprehension
- Mistake as to Identity
- Nature.
- Two Contexts.
- Mistake as to Identity: Distance Dealings: Contract Void.
- Cundy v Lindsay (1878) Followed.
- Supposed Party Must In Fact Exist.
- Mistake as to Identity: Face-to-Face Dealings.
- Aberrant Case Now Discarded.
- Evaluation: Mistake as to Identity (1): Distance Dealings.
- Evaluation: Mistake as to Identity (2): Face-to-Face Dealings: Lewis v Averay.
- 13 Duress
- General Features
- Anomalous Features of Duress as to Person
- Lawful Act Threatened: When is this Illegitimate?
- 14 Undue Influence
- Main Elements
- The Spectrum of Undue Influence: Illustrative Cases
- Spiritual Tyranny and the Convent.
- Lender’s Breach of Fiduciary Duty.
- No Undue Influence: Confidentiality and ‘the SAS’.
- Trust and Dependence Relationship Proved on Facts: Employer and Employee.
- Trust and Dependence Relationship Proved on Facts: Spouses.
- Octogenarian Eccentric Landowner and Trusted Local Ally and Friend.
- Vulnerable Parents.
- Opportunity for Undue Influence Arising as Relationship has Developed During Protracted Dealings.
- Retrospectively Visible Pattern of Undue Influence.
- Surety Agreements and Constructive Notice of Misrepresentation, etc
- Recognition of the Lender’s Constructive Notice of Impropriety.
- Seminal Modern Cases.
- Misrepresentation by Borrower.
- Borrower’s Non-disclosure.
- Borrower’s Undue Influence.
- Joint Loan.
- Constructive Notice Analysis: Surety Receives Legal Advice.
- Quality of Legal Advice.
- Doctrinal Neighbours: the Relationship between Unconscionability and Undue Influence.
- 15 Unconscionability
- Unconscionability in Equity
- Doctrinal Neighbours: the Relationship between Unconscionability and Undue Influence
- Inequality of Bargaining Power: Lord Denning’s Infertile Suggestion
- Part V Illegality and Public Policy
- Preliminary Material
- 16 Illegality
- Outline of Illegality and Public Policy
- Main Propositions.
- Main Heads of Illegality or Public Policy.
- 16.08
- (1) Gross Immorality.
- (2) Procuring Marriage.
- (3) Preventing Marriage.
- (4) Surrogacy Agreements Within the United Kingdom.
- (5) Economic and Personal Enslavement.
- (6) Unreasonable Restraint of Trade, etc.
- (7) Trading with the Enemy.
- (8) Bribery and Corruption and Cheating of Public Authorities.
- (9) Suborning of Adjudicators or Witnesses, etc.
- (10) Maintenance and Champerty.
- (11) Ousting the Courts’ Jurisdiction.
- Lawful Transaction.
- Agreements Contrary to Statute
- Valid Collateral Contract Alongside Main Illegal Contract
- Innocent Party Can Sue Despite Defendant’s Unilateral Decision to Perform Illegally
- Minor Act of Illegality Not Entitling Other Party to End the Contract
- Arrangements Designed to Cheat the Revenue
- Financial Interest in Outcome of Litigation: Champerty and Maintenance
- Restraint of Trade
- Nature.
- Sale of Business.
- Employment Contracts.
- Restraining Competition Between Law Firms.
- Restraint of Trade: Constraining Creative Talent.
- Filling Station ‘Solus Agreements’: Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd (1968).
- Severance and Post-Employment Restrictive Covenants.
- Evaluation: Wrongfully Dismissed Employee Released from Restrictive Covenants.
- Prostitution (‘Sex Working’)
- Restitution or Unjust Enrichment and Illegal Contracts: Patel v Mirza
- Restitution Prima Facie Available.
- Disarray before Patel v Mirza.
- The Old Law: Situations Where Payor Could Recover in Restitution before Patel v Mirza.
- Patel v Mirza in Greater Detail.
- Majority Analysis in Patel v Mirza.
- The Range of Factors or Multi-factorial Approach in Patel v Mirza.
- Are There any Types of Illegal Transaction Where Restitution is Inappropriate?
- Minority Analysis in Patel v Mirza.
- Case Law Reception of Patel v Mirza.
- Singaporean Criticism.
- Outline of Illegality and Public Policy
- Part VI Terms and Interpretation
- Preliminary Material
- 17 Express Terms
- Classification of Express Terms
- Written Contracts: the Parol Evidence Rule
- Contractual Assurances and Collateral Warranties
- Outline.
- Determining Whether a Statement Has Become a Term of the Main Contract.
- Judicial Caution towards Collateral Warranties.
- Criteria for Identifying a Collateral Warranty.
- Collateral Warranty Not Found During ‘Subject to Contract’ Negotiations.
- Collateral Warranty that Reasonable Care has been Taken when Providing a Business Estimate.
- Identification of Terms: Inconsistency Between Standard and ‘Bespoke’ Terms
- Incorporation of Written Terms, Including Exclusion Clauses
- Outline: the Five Modes of Incorporation.
- Mode (2): Direct Notice.
- Contractual Document.
- Failure to Read.
- Timing: Post-formation Notification is Ineffective.
- Reasonable Steps Taken to Notify Party.
- An Exclusion Clause Is Not Necessarily Onerous.
- Mode (3): Signature.
- Leading Case in Detail.
- Common Law Exceptions to the Signature Rule.
- Statutory Control of Exclusion Clauses affecting Purchasers of Goods.
- Signature Incorporating a CFA ‘Death Clause’: Payment for Legal Work Wasted if Client Dies before Conclusion of Claim Funded by a Conditional Fee Agreement.
- Rejection of Power to Override the Signature Rule in Absence of Misrepresentation, Duress, or Non Est Factum.
- Are There Indications of a Different Approach?
- Evaluation: Signature Rule’s Only Exceptions Are Duress, Misrepresentation, or Non Est Factum.
- Proferens Seeking to Rely on an Exclusion Clause was Aware of the Other Party’s Failure to Read: Canadian Discussion.
- 18 Implied Terms
- Summary
- Implied Terms of Law
- Implied Term to Avoid Arbitrary Exercise of Contractual Discretion
- Implied Terms in Fact: General Points
- Necessity and Obviousness: (1) Business Efficacy and (2) Officious Bystander Tests
- Implied Terms in Fact and Written Contracts
- Implication and Construction are Different Exercises.
- Facts and Significance of the Marks and Spencer Case.
- Implied Terms and ‘Corrective Construction’.
- No Conflict with Written Terms.
- Implied Term Not to be Inserted to Upset Careful Allocation of Commercial Risks.
- Hardly Ever, Not Never.
- Written Agreements Lacking Specificity.
- Nine Cases Where a Term Implied in Fact Was Found
- Ten Cases Where a Term Implied in Fact Was Not Found
- Implied Terms and Entire Agreement Clauses
- Implied Term Based on Custom
- 19 Good Faith
- 19.01
- Express Duty to Perform in Good Faith
- Implied Term of Good Faith in ‘Relational Contracts’
- Evaluation: Good Faith
- The Ambiguity of ‘Good Faith’.
- Good Faith as a Source of a General Implied Obligation to Perform: Traditional Absence of a General Obligation to Perform in Good Faith.
- Good Faith as a Doctrinal Common Thread: Latent Principle of Good Faith as an Overarching Feature, Characteristic, or Criterion.
- Are We Speaking of ‘Good Faith’ as the Source of an Implied Obligation or as a Doctrinal Common Thread?
- 20 Interpretation of Written Contracts
- Preliminary Material
- Summary
- Whole Contract to be Considered
- Bar on Evidence of (1) Subjective Intent, or (2) Negotiations, or (3) Subsequent Conduct
- 20.25
- The First Bar: Bar on Evidence of Subjective Intent.
- The Second Bar: Bar on Evidence of Negotiations.
- Negotiation Evidence Bar and Implied Terms of Fact.
- Contexts Where Negotiation Evidence Bar Does Not Apply.
- Negotiations Relevant to a Different Contract.
- No Bar to Considering Previous Contracts.
- Arguments Supporting the Bar on Negotiation Evidence.
- Deleted Words.
- Rectification.
- The Third Bar: Bar on Evidence of Post-formation Conduct.
- Factual Matrix Evidence (Background to the Transaction Other than Negotiations)
- Commercial Common Sense
- No Escape from A Bad Bargain: Arnold v Britton (2015)
- Wording Probably the Result of Tough Bargaining: Wood v Capita (2017)
- ‘Corrective Construction’
- Nature and Criteria.
- Examples of ‘Corrective Construction’: Example 1. Investors Compensation Scheme Ltd v West Bromwich Building Society (No 1) (1998).
- Example 2. Chartbrook Ltd v Persimmon Homes Ltd (2009).
- Example 3.
- Example 4.
- Example 5.
- Example 6.
- Example 7.
- Example 8.
- Example 9.
- Example 10.
- Example 11.
- Examples 12 to 15.
- Contexts Where ‘Corrective Construction’ is Unavailable.
- 20.108
- (1) ‘Bespoke’ and Complicated Document: Not Clear that Text is Defective.
- (2) Obvious Error but No Obvious Solution Shown.
- (3) Suggested Obvious Solution is Contentious: It Exceeds what is Necessary to give Adequate Expression to the Contract.
- (4) A Bad Bargain Has Arisen for One Party.
- (5) Contract is Beyond Verbal Redemption.
- (6) Public Registers.
- Radically Different and Unimaginable Change of Events
- 21 Rectification
- Outline
- Rectification and Access to Evidence
- Common Mistake Rectification
- Nature.
- Four Bars to Rectification
- Fourth Bar: Third Party Rights.
- No Rectification Where Negotiation Formula Matches the Final Agreement.
- Common Mistake Rectification: No Need for a Prior Enforceable Agreement.
- Common Mistake Rectification: Was There a Last-Minute Change of the Draft Agreement?
- Evaluation: Objectivity and Common Mistake Rectification.
- Unilateral Mistake Rectification
- 22 Exclusion Clauses and Consumer Protection
- Exclusion Clauses and the Common Law
- Outline.
- Common Law Doctrines Concerning Exclusion Clauses.
- Exclusion Clauses: No Doctrine of Fundamental Breach.
- ‘Deviation’ in Maritime Carriage: A Special Rule.
- Judicial Interpretation of Exclusion Clauses.
- Modern Decisions Exemplifying the New Approach to Exclusion Clauses.
- Canada Steamships: The Old Judicial Approach to Exclusion Clauses and Negligence.
- Judicial Interpretation of Indemnities.
- Exceptions Clauses in Commercial Insurance Contracts.
- ‘Direct Loss or Damage’ and ‘Indirect or Consequential Loss or Damage’.
- Evaluation: Exclusion Clauses: ‘Direct’ and ‘Indirect or Consequential’ Loss.
- Statute and Exclusion Clauses
- Outline.
- Structure of the Unfair Contract Terms Act 1977.
- Standard Written Terms of Business (Section 3, UCTA).
- Exclusion Clause Reasonable (1): Goodlife Case (2018).
- Exclusion Clause Reasonable (2): Watford Electronics Case (2001).
- Exclusion Clause Unreasonable (1): George Mitchell Case (1983).
- Exclusion Clause Unreasonable (2): St Albans Case (1996).
- Exclusion Clause Unreasonable (3): Ampleforth Abbey Case (2012).
- Unfair Terms under the Consumer Contracts Legislation
- ‘Consumer’ and ‘Trader’ Defined.
- Basic Test of Unfairness.
- Core and Unreviewable Matters.
- ‘Price’ Beyond Statutory Challenge.
- Cancellation Fee Part of the ‘Price’ for Consumer Services.
- Parking Charges and the Unfair Terms in Consumer Contracts Regulations 1999 (now the Consumer Rights Act 2015, Part 2): Draconian Overstay Parking Charge Survives Scrutiny.
- Renewal of a Tenancy: Restriction Preventing Sub-Letting: Not Unfair under the Consumer Protection Regime.
- ‘Death Clause’ Not Unfair.
- Exclusion Clauses and the Common Law
- Part VII Discharge and Breach
- Preliminary Material
- 23 Termination by Notice or Consent
- 24 Breach
- Outline
- Renunciation
- Outline.
- Implicit Renunciation.
- Renunciation by Communication to a Third Party.
- Evaluation: Renunciation by Communication to a Third Party.
- Renunciation: Seminal Case 1: Freeth v Burr (1874).
- Renunciation: Seminal Case 2: Mersey Steel and Iron Co Ltd v Naylor, Benzon & Co (1884).
- No Renunciation: Possibility that Contracting Party’s Superior Might Restrict Enjoyment of Contractual Subject-matter.
- Repudiation
- Anticipatory Breach
- Good Faith Default is prima facie a Breach
- General Rule: Default Constitutes Breach.
- Leading Case.
- Outline of Qualifications upon the General Rule that Breach Occurs Despite the Defaulter’s Good Faith.
- Qualification (1): Obvious Unwitting Default Which Should be Pointed Out.
- Qualification (2): Arguable Unwitting Default Which Should be Queried.
- Qualification (3): Point Raised in Good Faith and Referred to Adjudicator.
- Evaluation: Good Faith Breach: Neutral Evaluation of a Disputed Issue.
- No Breach: Conduct Justified but Wrong Reason Given.
- Innocent Party Justified in Terminating: But is Innocent Party Entitled to Claim Loss of Bargain Damages Based on the Other’s Serious Breach?
- Promissory Conditions
- Types of Promissory Term.
- Cancellation Right as Distinct from a Promissory Condition.
- Identifying a Promissory Condition.
- ‘Condition’ in a Contract Normally Denotes a Technical Condition, Unless the Whole Contract Dictates Otherwise.
- ‘Condition’ Upheld in its Technical Sense: Schuler Case (1974) Distinguished.
- Commercial Sale: Condition: Trivial Breach: Statutory Relief of Vendor so that Buyer Unable to Terminate.
- ‘Time of Essence’: Condition.
- Buyer of Land Late in Completing: Equitable Relief Unavailable.
- Owner’s Statement Concerning Chartered Ship’s Location: Condition.
- Owner’s Statement Concerning Availability of Chartered Ship: Condition.
- Condition and Shipment Date: Buyer’s Duty to Give Specified Notice of Date of Shipment.
- Termination for Breach Clauses.
- Evaluation: Termination for Breach Clauses: the Rice Case and Freedom of Contract.
- ‘The Antaios’ (1985): Precursor to the Rice Case (2000).
- Later Decisions.
- Range of Default.
- Clarity of Drafting: Condition Found in a Sophisticated Commercial Document.
- Singaporean Case Not Following the Rice Case.
- Throwing Away the Right to Sue for Loss of Bargain: Termination Clause: No Reliance on Breach.
- Intermediate Terms
- Outline.
- Indications that Term is ‘Intermediate’.
- Intermediate Term: Charterer’s Payment Date.
- Intermediate Term: Express Term in Commercial Sales of Goods.
- Seriousness of Breach Must be Assessed at Time of Termination.
- Intermediate Term: Severity Test.
- Intermediate Term: ‘Once Intermediate, Always Intermediate’.
- Innocent Party’s Election whether to Terminate or Affirm the Contract
- Communication of Election
- Election is Final Once Communicated.
- Manner of Communication: (1) Expressly or (2) by Conduct, or (3) Inferred from Inaction.
- Decision to Treat Contract as Discharged for Breach: ‘Acceptance’ of the Repudiation, etc.
- Decision to Affirm the Contract.
- Communication of Decision to Terminate for Breach Based Both on the Common Law and on an Express Termination Right.
- Communication of Decision to Terminate But Based on an Erroneous Assumption that the Matter is Governed by an Express Termination Clause.
- Situations Where Right to Terminate Survives
- Consequences of Election to Affirm
- Consequences of Termination or Discharge for Breach
- 25 Incomplete Performance
- Entire Obligation Rule
- Outline.
- No Duty to Pay: Builder Running Out of Funds and Not Finishing Construction Work.
- No Duty to Pay: Work Done but Seriously Defective.
- Duty to Pay, Subject to Abatement: Work Done but with Minor Defects.
- No Opportunity for a ‘Rerun’: Burden of Proof.
- Professional Services: Insufficient Qualifications.
- Neutral Determination: Contract for a Positive Result.
- Evaluation: the Entire Obligation Doctrine.
- Entire Obligation Rule
- 26 Force Majeure and Frustration
- Force Majeure Clauses
- Nature.
- No Protection Where Party at Fault.
- ‘Beyond Reasonable Control’.
- Short Supply: Supplier Exonerated.
- Only One Party Covered in Relevant Event; Severe Financial Downturn Not Force Majeure.
- Economic Interest of a Party Insufficient.
- Reasonable Endeavours to Remedy Situation.
- Force Majeure Clauses and Notification Requirements.
- Force Majeure Clauses and Exceptions Clauses.
- Force Majeure: Express Exception.
- Frustration: General Features
- Supervening Illegality
- Supervening Personal or Physical Impossibility
- Outline.
- Death.
- ‘Death Clause’ Operating to Exclude Doctrine of Frustration.
- Severe Illness.
- Mental Incapacity.
- Litigation Funding Arrangement Not Frustrated by Client’s Incapacity.
- War-time Imprisonment by Enemy.
- Peace-time Imprisonment.
- Supervening Physical Impossibility: Vital Premises Destroyed.
- Foreign Nation’s Social Breakdown Insufficient to Constitute Frustration of Music Tour.
- Physical Impossibility Without Destruction.
- Severe Delay
- Performance is Now Completely Pointless
- Self-Induced Frustration: Breach or Choice Precludes Frustration
- The Impact and Aftermath of Frustration
- Frustration’s Impact on the Contract: the Position at Common Law.
- Recovery or Cancellation of Payment (section 1(2)).
- Operation of the Provision.
- Solitary Reported Case.
- No Fixed Rules: No Rules of Thumb.
- Allowance for Goods or Services Supplied (section 1(3) of the 1943 Act).
- Solitary Reported Case: ‘End Product’ Analysis.
- End-Product Not Mentioned in Statute.
- Force Majeure Clauses
- Part VIII Remedies For Default
- Preliminary Material
- 27 Debt and Other Agreed Sums
- Debt Claims
- Outline.
- A Fixed Sum or a Sum Calculable by Reference to a Formula or Agreed Machinery.
- Has the Debt Accrued?
- Exceptionally Debt Might Subsist as an Independent Obligation.
- Has the Payment Obligation been Frustrated?
- Is Satisfaction of the Debt Illegal under Foreign Law?
- Debt Claims: Identifying Creditors.
- Debt and the Doctrine of Merger.
- Debt: Payment Obligation or Some Other Consideration?
- Interest and Damages for Late Payment
- Outline.
- Simple Interest on Court Judgment.
- Simple Interest: Payment Before Court Judgment.
- Compound Interest for Equitable Wrongs or Fraud.
- Common Law Damages for Late Payment.
- Award of Compound Interest as Damages.
- Arbitration Statute: Simple or Compound Interest.
- Agreed Interest.
- Construction Issues.
- Agreed Interest Remaining Payable After Judgment.
- Penalty Doctrine and Excessive Levels of Interest.
- Commercial Debts Statute.
- Debt Claim Where Other Party’s Cancellation Not Accepted
- Innocent Party’s ‘Legitimate Interest’
- Liquidated Damages and the Penalty Rule
- Further Aspects of Liquidated Damages Clauses
- Deposits: Nature and Controls
- Nature.
- Penalty Doctrine Applicable.
- Common Law Tariff of 10 Per Cent in Land Transactions.
- Forfeiture upon Default.
- Depositor’s Lawyer Not Liable.
- Pre-payment or Deposit?
- Additional Compensation.
- Accrued Duty to Pay Deposit.
- Repudiatory Failure to Pay Deposit.
- Deposit in Anticipation of Transaction.
- Statutory Relief Against Forfeiture.
- Leading Case.
- Exceptional Ground(s) for Relief.
- Debt Claims
- 28 Damages
- General Features
- Compensatory Damages: Outline.
- 28.01
- 28.02
- 28.03
- 28.04
- (1) No Punitive Damages.
- (2) Nominal Damages.
- (3) Expectation Interest: Loss of Bargain.
- (4) Reliance Loss.
- (5) Four Restrictions.
- (6) ‘Cost of Cure’ or ‘Reinstatement Damages’.
- (7) Injured Feelings, Vexation, etc.
- (8) ‘Negotiating Damages’.
- (9) Loss of Chance.
- (10) Causation.
- (11) Remoteness and Scope of Duty (or ‘Assumption of Responsibility’) Analysis.
- (12) Mitigation.
- (13) Contributory Negligence.
- (14) Post-breach Events.
- (15) Party’s Least Onerous Mode of Performance.
- (16) Discretionary Mode of Performance.
- (17) One-off Award.
- (18) Impecuniosity.
- (19) Litigation Expenses.
- (20) Liquidated Damages.
- (21) Interest and Damages.
- Has Substantial Loss Been Proved?
- No Punitive Damages.
- Compensatory Damages: Outline.
- ‘Expectation Interest’ or ‘Loss of Bargain’ Damages
- ‘Reliance Loss’ Damages
- Nature.
- Leading Illustration.
- Claimant is Shown to Have Entered into a Loss-Making Contract: Reliance Loss Unavailable if Alleged Loss is in fact Illusory.
- Leading Case on the Loss-Making Exception.
- Burden of Proof.
- Evidential Complications when Applying the Loss-Making Exception.
- No Claim Where Loss Successfully Mitigated.
- Other Claims for Economic Loss, for example, Wasted Management Time.
- ‘Cost of Cure’ or ‘Reinstatement’ Damages
- Compensation for Injured Feelings or Psychological Distress
- ‘Loss of Chance’ Damages
- ‘Negotiating Damages’
- Post-Breach Events
- Causation
- Remoteness Outline
- Transfield Case: Remoteness and Scope of Duty Reasoning
- Extent of Harm Need Not be Contemplated
- Huge Third Party Liability Losses Not Too Remote
- Special Rule for Exceptionally Lucrative Profits
- Professional Negligence: Contractual Remoteness Test Applicable
- Scope of Duty Analysis of Professional Liability
- Mitigation of Loss
- Onus on Innocent Party to Try to Avoid or Eliminate Loss: ‘Rule One’
- Extra Expense Incurred by Innocent Party in Attempted Mitigation: ‘Rule Two’
- Loss Actually Avoided Has to be Brought into the Reckoning: ‘Rule Three’
- Issue.
- Was the Reduction or Elimination of Loss Attributable to the Innocent Party’s Personal Conduct?
- Collateral Benefits Not Relevant.
- Factors Relevant When Deciding Whether ‘Rule Three’ of the Mitigation Should Apply.
- Leading Case.
- Charterer’s Renunciation: Fit-out Costs Recouped.
- Charterer’s Renunciation: Advantageous Sale of Vessel Not Taken into Account.
- Cost of Cure Can Constitute Mitigation.
- Contributory Negligence (Only on Special Occasions)
- Four Further Restrictions Upon Damages Awards
- General Features
- 29 Specific Performance and Other Equitable Remedies
- Specific Performance: General Features
- Specific Performance: Expansion Resisted in the Co-operative Insurance Case (1998)
- No Specific Performance to Run a Business.
- Specific Performance is a Residual Remedy.
- No Specific Performance to Compel Tenant to Run Hotel Business in Precise Compliance with Specified ‘Operating Standards: Adequacy of Damages, etc.
- Specific Performance to Require Expensive Repair of Unsatisfactory Exterior of Skyscraper.
- Injunctions: General Features
- Injunctions: No Indirect Compulsion of Contracts Involving Personal Services or Trust and Confidence
- Contempt of Court Sanctions for Non-Compliance with Specific Performance or Injunctions
- Account of Profits Consequent on Breach of Contract
- Declarations
- ‘Stays’ Upon Legal Proceedings
- Part I Fundamentals
- Further Material
