UCL FACULTY OF LAWS LLB CONTRACT TUTORIALS Dr Lucinda Miller (Co-convenor ) Dr Prince Saprai (Co-convenor 2017/2018 Guidance for Tutorial Preparation In preparation for each tutorial you will need to ensure that you read the materials in the ‘Essential Reading’ section. You should also be ready to discuss the case law that is included within the ‘Important Cases’ section. We only include a selection of cases for detailed discussion in each tutorial and this does not mean that other cases on the topic can be ignored. Be guided by your lectures and textbook reading as to the important cases in each area of law. If in doubt, speak to your tutor. The ‘Discussion’ questions are designed to guide you through some of the key principles that emerge from each topic and will help you clarify your thoughts on the topic. Your tutor may want to discuss them in the tutorial with you to ensure your understanding of the issues that the tutorial raises. In addition, each week your tutor will instruct you to prepare either the problem question or the essay question. The ‘Further Reading’ section contains academic articles that explore some of the themes of the tutorial in more detail. It is unlikely that you will have time to read them prior to each tutorial and you will not be expected to do so, unless instructed by your tutor. However, they will be invaluable references for essay and exam preparation. Finally, anything that has not been discussed in class should not be dismissed as unimportant, but will prove useful for revision purposes prior to your exams. Many of the questions have been extracted from past exam papers and are therefore an important source of materials. Please note that the tutor will not be able to cover EVERYTHING in the tutorial each week and will make decisions regarding the focus of the tutorial according to the particular needs of each class. Attendance at tutorials is compulsory: you should be aware that absence from tutorials has serious consequences and may result in you being unable to sit the examination. If you are unable to attend a tutorial you should contact your tutor in advance explaining your reasons. Your tutor may in exceptional circumstances allow you to attend another tutorial group to make up for the one that you have missed. Please do not under any circumstances attend another tutorial group without having obtained the express permission of your tutor and (where they differ) the tutor from the group that you want to attend. **Please note that all readings (apart from McKendrick textbook) are available through the Moodle website.  TUTORIAL 1 CASE STUDY This tutorial is part of your introduction to law and legal method. In particular, the object of this tutorial is to familiarise you with reading Contract law cases. Essential Reading **Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401 The case is available on Westlaw. Here is the link: http://login.westlaw.co.uk/maf/wluk/app/document?&suppsrguid=ia744d06400000139b0ce6d4a3f986481&docguid=I7FE91491E42711DA8FC2A0F0355337E9&hitguid=I7FE91490E42711DA8FC2A0F0355337E9&spos=1&epos=1&td=3&crumb-action=append&context=4&resolvein=true You should also read this case note of the decision by Professor Rick Rawlings: **R Rawlings ‘Battle of the Forms’ (1979) 42 Modern Law Review 715 Here is a link to the case note: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-2230.1979.tb01565.x/abstract Butler Machine Tool is an interesting case raising issues about the formation of contracts. These issues will be discussed in more depth in a future tutorial on Offer and Acceptance. Don’t worry if at this stage you don’t understand all of the legal detail. The purpose of this tutorial is just to familiarise you with reading contract law cases. After you have read the case and the case note answer the following questions. Bring your answers with you to the tutorial. Briefly explain the material facts of this case. Explain the procedural route by which this dispute came to the Court of Appeal. Where in the judicial hierarchy do the judges deciding this case stand? What is the name of the respondents’ counsel? What is the traditional approach to deciding cases of this type? What is the alternative approach advocated by Lord Denning? What according to Professor Rawlings are the advantages and disadvantages of these approaches? Do the approaches of the judges in this case differ? Why does the Court think that Thesiger J got the decision wrong? What is the ratio decidendi of this case?  TUTORIAL 2 Lunch after this? Students are encouraged to return to the reading in this tutorial when they reach the end of the course. Essential Reading Please ensure that you read the course introductory materials – ‘Contract Course Information 2017/2018’- which is posted on moodle. R Brownsword Contract Law: Themes for the 21st Century (OUP 2006) 1-9, 28-70 (extracts on moodle) A Burrows Understanding the Law of Obligations: Essays on Contract, Tort and Restitution (Hart 1998) ch 1 (this chapter examines what is meant by the ‘law of obligations’ and the distinctions between contract, tort and restitution. It will help you situate contract law within the broader framework of obligations law) (available on moodle) Further Reading E McKendrick ‘Contract: Rich Past Uncertain Future?’ (1997) Current Legal Problems 25 H Beale and T Dugdale ‘Contracts between Businessmen: Planning and the Use of Contractual Remedies’ (1975) 1 British Journal of Law and Society 45 Discussion What do you think is the purpose of contract law? Can you explain what the principle known as ‘freedom of contract’ is? If freedom of contract is strictly upheld, what might be some of the negative consequences? Why do you think contracting parties, whose contract has no connection to England, might choose to govern their contract under English law? Contract law belongs to the area of law known as private law. What do we mean by this, and in what way is private law distinguishable from public law? In what way might it be argued that this distinction is in decline in modern times? What do you understand by the ‘law of obligations’? Parties who informally agree to something; lock in. Contract law provides substitute for lock in. Provides framework for those that don’t trust each other, but can be confident that their agreements will be upheld. People only use contracts when enlisting remedies as opposed to using them to guide proceedings. Your rights (freedom of expression) are only valid and protected, if against the state. Fallacy. Exclusion clauses taken to the extreme render contracts null. Freedom of contract cannot be absolute, GoT example. English law was under a lot of pressure to generate a system that allowed for commercial fluidity as a result of high traffic. TUTORIAL 3 OFFER AND ACCEPTANCE Essential Reading McKendrick, Contract Law, chs 2 & 3. Further Reading R Rawlings ‘Battle of the Forms’ (1979) 42 Modern Law Review 715 (see Tutorial 1) S Gardner ‘Trashing with Trollope: A Deconstruction of the Postal Rule in Contract’ (1992) 12 OJLS 170 D Nolan ‘Offer and Acceptance in the Electronic Age’ in A Burrows and E Peel (eds) Contract Formation and Parties (OUP 2010) 61 Important Cases Dickinson v Dodds (1876) 2 Ch D 463 Household Fire Insurance v Grant (1879) 4 Ex D 216 Byrne v Van Tienhoven (1880) 5 CPD 344 Henthorn v Frazer [1892] 2 Ch 27 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 PSGB v Boots [1953] 1 QB 101 Entores v Miles Far Eastern Corp [1955] 2 QB 327 Partridge v Crittenden [1968] 1 WLR 1204 Holwell Securities v Hughes [1974] 1 WLR 155 Butler Machine Tool v Ex-Cell-O Corp [1979] 1 WLR 401 Gibson v Manchester CC [1979] 1 WLR 294 Brinkibon v Stahag Stahl [1983] AC 34 Blackpool & Fylde Aero Club v Blackpool BC [1990] 3 All ER 25 Discussion Why is it important to determine the precise moment that agreement takes place? Do you think we can always analyse the process of contract formation into an offer and acceptance framework? Does electronic technology raise particular difficulties in respect to contract formation? Problem Try to work out which legal issues are raised by the facts and then apply the relevant legal rules to them. There will be some areas of uncertainty because the information you have is limited and some because there is uncertainty about what the law is on the basis of the case law. On 2nd October Galvatron PLC sends identical letters to three local firms asking if they wish to buy an unused widget making machine that they have acquired. The letters state that “the best offer received by 9.30am on 10th October will secure the machine.” The following day Prime PLC sends a fax saying: “Is it a 5XL model? If so we will offer $5000, if not, $3000.” Unfortunately due to a transmission fault, the final ‘0’ is missing so that the last figure appears to be $300. The machine is not a 5XL. Optimus PLC sends a letter offering $2500 or $100 more than your highest offer you receive under $3500.” Megatron PLC sends a telex on the evening of the 9th October offering $3500. The offer is received on Galvatron’s telex machine at 6pm on 9th October, but not read until 10.30am on 10th October. Advise Galvatron whether it is obliged to sell the widget making machine and if so, to whom. Essay for Discussion Traditionally a contract is formed where the acceptance is a mirror image of the offer. How difficult is it to establish where this point is in English contract law? In your own time, consider how you might answer the following problem question: Harry is a property developer. Although he has done well in the past, 2008-9 has been a very difficult time for him and his business is struggling. He is trying to obtain a loan, but the banks are reluctant to lend money to him so far. Bryony works for a hedge fund as a market analyst and has known Harry in a business capacity for several years. Harry and Bryony meet for dinner to discuss Harry’s financial situation. Bryony expresses concern and asks whether she can assist Harry to obtain the finance. Harry suggests that Bryony could obtain a loan for £50,000 on his behalf. He states that if she is successful in obtaining a satisfactory loan he will pay her £1000 commission. Bryony proceeds to investigate the possibility of obtaining the loan and contacts many banks. Hi-Rate Bank plc replies by letter stating they will offer her a loan, but only after she comes into the bank to discuss the situation with their senior lending advisor and sign the papers. On her way to her appointment with the bank, Bryony receives a message on her Blackberry from her secretary Agnes telling Bryony that Harry has subsequently obtained a loan with Hi-Rate Bank plc and that he will not pay the £1000 commission owed to Bryony. Bryony does not read the message until after the meeting. Bryony signs the loan papers with the bank and attempts to claim the £1000 commission from Harry. Harry refuses to pay. Advise Bryony. TUTORIAL 4 CONSIDERATION, INTENTION TO CREATE LEGAL RELATIONS & PROMISSORY ESTOPPEL Essential Reading McKendrick Contract Law chs 5 & 7 Further Reading M Chen-WIshart ‘A Bird in the Hand: Consideration and Contract Modification’ in A Burrows and E Peel (eds) Contract Formation and Parties (OUP 2010) J O’Sullivan ‘In Defence of Foakes v Beer’ (1996) Cambridge Law Journal 23 S Hedley ‘Keeping Contract in its Place – Balfour v Balfour and the Enforceability of Informal Agreements’ (1985) 5 Oxford Journal of Legal Studies 391 Important Cases Stilk v Myrick (1809) 2 Camp 317 Shadwell v Shadwell (1860) 9 CB (NS) 748, 142 ER 62 Foakes v Beer (1884) 9 App Cas 60 Central London Property v High Trees House [1947] KB130 Combe v Combe [1951] 2 KB 215 Ward v Byham [1956] 1 WLR 496 Pao On v Lau Yiu [1980] AC 614 Amalgamated Investment v Texas Commerce Int Bank [1981] 3 All ER 577 Walton Stores v Maher (1988) 62 ALJR 110, (1988) 164 CLR 387 Williams v Roffey [1991] 1 QB 15 Re Selectmove [1995] 1 WLR 474 MWB v Rock Advertising Ltd [2017] Q.B. 604 Collier v Wright [2008] 1 WLR 643 Discussion English law is distinguishable from other legal systems in the way that consideration is a requirement for contact formation. Why maintain consideration? Do you think that it serves any practical purpose? What does it mean to say that the courts will not assess the adequacy of consideration? Is this the same thing as saying that consideration need not have an economic value? Is Williams v Roffey Bros bad law? If so, why? Did the development of promissory estoppel deal a severe blow to the doctrine of consideration? If so, how severe? How firm is the rule that promissory estoppel cannot be used as a sword? How firm is the requirement that the promisee must not have behaved in an inequitable manner (and what does this mean?). If a ‘promise to pay more’ can be good consideration, should not a ‘promise to accept less’ also be good consideration? What role do you think the doctrine of ‘intention to create legal relations’ plays? Is it primarily designed to keep the law out of social agreements? Do you think this role is somewhat out-dated in modern times? Problem Marion has her own cupcakes business, FairyCakesRUs. Her key selling point is that her cakes are all made in her own kitchen. Gradually Marion is building her business. She has major contracts to supply cupcakes to two law firms: Greedy, Grouch & Grumpy LLP and Slackers LLP. She is to supply 100 chocolate cupcakes every week for a year to Greedy, Grouch & Grumpy LLP and 50 assorted flavour cupcakes every week for a year to Slackers LLP. Payment is made by invoice to each firm at the end of each month on each contract. The following events occur: Marion makes 2 deliveries to Greedy, Grouch & Grumpy LLP. Before the third delivery Marion realises she has underestimated how much chocolate will be required and she does not have enough for 100 cupcakes. Marion contacts Greedy, Grouch & Grumpy LLP and informs them of the possible shortfall. The firm then offer Marion an extra £200 if she is able to deliver the 100 cupcakes on time. Greedy, Grouch & Grumpy LLP are very keen that 100 cupcakes should be delivered as they have a meeting with a very important client who is about to sponsor their pro bono programme for £400,000 and who loves cupcakes. When Marion invoices the firm, they refuse to pay the extra money. Marion delivers a batch of cupcakes to Slackers LLP. On delivery, the managing partner compliments her on the quality of the cakes and tells her he remembers that his favourite cupcakes, when he was a child, contained fresh cream. Marion puts cream into 10 of the next delivery of cupcakes and takes them to the firm the following week. She sees the managing partner again and he says, “Oh great, we will give you an extra £100 for doing that.” When Marion puts the additional £100 on her next invoice to Slackers LLP, they refuse to pay her more than she was already entitled to under the original contract. Marion has significantly underestimated how difficult it is to bake 50 assorted cupcakes a week for Slackers LLP in addition to her contract with Greedy, Grouch & Grumpy LLP. She therefore asks Slackers LLP whether it is possible to deliver 30 cupcakes a week for 2 months until she has had a chance to put a kitchen extension on her house and employ some extra staff to help her. Slackers LLP agree and Marion starts building work on her house. After 2 months, the new kitchen is completed and Marion’s daughter, Frankie, comes to work with her. Slackers LLP find out that Marion has a new kitchen and is being helped by Frankie and insist on her delivering the extra cakes she failed to deliver under the original contract and also on delivery of 50 cupcakes a week from now on. Advise Marion. Essay for Discussion “Consideration must be sufficient not adequate.” To what extent does this statement reflect the practice of the courts when they determine whether a contract should be enforceable or not?  TUTORIAL 5 MISTAKE Essential Reading McKendrick Contract Law ch 16 Further Reading C MacMillan ‘How Temptation Led to Mistake: an Explanation of Bell v Lever Bros Ltd’ (2003) 119 LQR 625 C MacMillan ‘Rogues, Swindlers and Cheats: The Development of Mistake of Identity in English Contract Law’ [2005] CLJ 711 A Tettenborn ‘Agreements, Common Mistake and the Purpose of Contract’ (2011) 27 Journal of Contract Law 91 Important Cases Raffles v Wichelhaus (1864) 2 H&C 906 Smith v Hughes (1871) LR 6 QB 597 Cundy v Lindsay (1878) 3 App. Cas. 459 Scriven v Hindley [1913] 3 KB 564 Bell v Lever Bros [1932] AC 161 Hartog v Colins & Shields [1939] 3 All ER 566 Ingram v Little [1961] 1 QB 31 Lewis v Avery [1972] 1 QB 198 Associated Japanese Bank v Credit du Nord [1988] 3 All ER 902 Great Peace Shipping v Tsavliris Salvage (International) [2003] QB 679 Shogun Finance v Hudson [2003] UKHL 62 Discussion Is the doctrine of mistake conceptually coherent or is it simply a number of different problems lumped together in the same doctrinal category? Do we really need a doctrine of mistake? Why is mistake so narrow in scope? Do you think that it should be expanded? Problem: Peter is a jeweller and owns a shop in an expensive part of London. Rory enters the shop looking for a present for his girlfriend. He is interested in a heart-shaped diamond ring with a price tag of £2,000. Unknown to Peter, this ring was worn by a famous pop star, Lady Blah Blah, at one of her UK concerts. This means the ring is far more valuable than Peter realises, and it is actually worth £10,000. Rory is also attracted to a display of watches by the Swiss watchmaker, Gamma. Sitting amongst these watches is one made by the inferior watchmaker, Alpha. This ‘Alpha’ watch is priced at £4,000. This price is the same as the price that a similar looking watch by Gamma would be sold for. Peter has not labelled the watch as a Gamma watch, although Rory mistakes it for one. Rory decides to buy the £4,000 watch for himself and the £2,000 diamond ring for his girlfriend. The following day, Peter receives an order through his internet jewellery business from a woman calling herself Milena Moses. The order is for a pearl bracelet, priced at £13,000. Peter has been having problems with his computer and it is not clear from the order which method of payment Milena wishes to use for the purchase. He therefore telephones her with his new smart phone. This smart phone automatically shows the face of the person with whom he is speaking on his screen. Milena Moses tells Peter that she will send him a cheque for the full amount. On Peter’s insistence that she show personal identification, she holds up a driving license with the name of ‘Milena Moses’ for Peter to view on his screen. Peter sends her the bracelet on receipt of the cheque. A week later, Rory returns to the shop complaining that the watch he has bought is not a Gamma watch but an Alpha one. The Alpha watch is worth only £400. Rory then demands the difference in value between the two watches from Peter. Peter then discovers that the diamond ring is worth far more than he realized, and demands that Rory returns it to him. Peter then receives a call from the bank informing him that the cheque for the bracelet has been dishonoured. He discovers that, in fact, the woman was not Milena Moses, but a rogue who was using a chequebook and driving license that she had stolen from Milena Moses. Advise Peter. (LLB Contract Exam August 2012) Essay for discussion: ‘Bell v Lever Bros has been described as the most unsatisfactory decision handed down by the House of Lords. However, the decision seems simply indicative of an area of law riddled with incoherence and complexity’. Discuss.  TUTORIAL 6 MISREPRESENTATION Essential Reading McKendrick Contract Law ch 17 Further Reading PS Atiyah and GH Treitel ‘Misrepresentation Act 1967’ (1967) 30 MLR 369 R Hooley ‘Damages and the Misrepresentation Act 1967’ (1991) 107 LQR 547 J Poole and J Devenney ‘Reforming Damages for Mispresentation: The Case for Coherent Aims and Principles’ (2007) Journal of Business Law 269 Important Cases Redgrave v Hurd (1881) 20 Ch D 1 Edgington v Fitzmaurice (1885) 29 Ch D 459 Derry v Peek (1889) 14 App Cas 337 Oscar Chess v Williams [1957] 1 WLR 370 Hedley Byrne v Heller [1964] AC 465 Dick Bentley v Harold Smith [1965] 1 WLR 623 Esso Petroleum v Heller [1976] QB 801 Howard Marine v A Ogden & sons [1978] QB 574 Walker v Boyle [1982] 1 All ER 634 Royscott v Rogerson [1991] 2 QB 297 Sindall v Cambridgeshire CC [1994] 3 All ER 932 Smith New Court v Scrimgeour Vickers [1997] AC 254 Clef Aquitaine SARL v Laporte Materials Ltd [2001] QB 488 Salt v Stratstone Specialist Ltd [2015] EWCA Civ 745 Discussion Should there be a general duty to disclose information? Why is it important to establish whether the statement made is a warranty or not? Think about the differences between damages for misrepresentation and damages for breach of contract (after you have studied topic 10!). Problem "Wings" is a business specialising in the charter hire of aircraft. Bernard telephones "Wings" and makes enquiries about hiring an aircraft for use in his engineering export business. Bernard has 500 boat engines which he needs to export to Canada by 30 June as part of a lucrative contract with a Canadian pleasure boat company, "Ripple." Bernard speaks to Andrew, the managing director of "Wings", who tells Bernard that based on the weight of each boat engine his aircraft can "comfortably carry 50 engines on each flight." Based partly on this information and partly on an assurance that Andrew gave Bernard as to the reliability of his aircraft, Bernard enters into a contract with "Wings" for the hire of one DC12 aircraft between 18 - 28 June for a hire of £5,000. Bernard takes delivery of the DC12 aircraft on 18 June and loads it with 50 boat engines. The DC12 is unable to lift off and the pilot informs Bernard that the engines are too heavy. Bernard telephones "Wings" who maintain that the DC12 is perfectly capable of carrying 50 boat engines of the weight described. Andrew's knowledge of the carrying capacity for the DC12 is based upon the figure given for the aircraft in the "Biggle's Register", a register of all aircraft, which is regarded as highly accurate and authoritative in flying circles. If Andrew had consulted the DC12's ownership documents (which are written in French) he would have discovered that the DC12 was not in fact capable of carrying a load of 50 boat engines of that weight. Fearful of being unable to deliver the boat engines to "Ripple" on time, Bernard returns the DC12 to "Wings" and hires a replacement aircraft, which can carry 50 boat engines, from "Bluebirds" at a cost of £7,000. Bernard delivers all the boat engines to "Ripple" on time. "Wings" are now demanding that Bernard pay the £5,000 hire charges for the DC12. Bernard refuses to pay and also claims compensation for the £7,000 hire charges he had to pay to "Bluebirds." Advise Bernard. Would it make any difference to your answer if Bernard were an aircraft enthusiast with an expert knowledge of DC12 aircraft? Essay for Discussion “The Misrepresentation Act 1967 is an untidy piece of legislative drafting. Its lack of textual clarity means the courts have been forced to determine its true meaning. One of the greatest problems with the courts’ interpretation is that the legislation now operates as a pro-claimant tool.” Discuss. (LLB Contract Exam May 2012)  TUTORIAL 7 DURESS AND UNDUE INFLUENCE Essential Reading McKendrick Contract Law chs 18 & 19 Further Reading P Birks ‘The Travails of Duress’ [1990] LMCLQ 342 P Birks and CN Yin ‘On the Nature of Undue Influence’ in J Beatson and D Friedmann (eds) Good Faith and Fault in Contract Law (OUP Oxford 1995) 57 M Chen-Wishart ‘Undue Influence: Beyond Impaired Consent and Wrongdoing towards a Relational Analysis’ in A Burrows and Lord Rodger of Earlsferry (eds), Mapping the Law: Essays in Honour of Peter Birks (OUP Oxford 2006) 201 Important Cases Williams v Bayley (1866) LR 1 HL 200 Allcard v Skinner (1887) 36 Ch 145 Barton v Armstrong [1976] AC 104 Pao On v Lau Yiu [1980] AC 614 Universe Tankships of Monravia v International Transport Workers’ Federation, The Universe Sentinel [1983] 1 AC 366 Atlas Express v Kafco [1989] QB 833 Williams v Roffey Bros [1991] 1 QB 1 CTN Cash & Carry v Gallagher [1994] 4 All ER 714 Barclays Bank v O’Brien [1994] 1 AC 180 CIBC Mortgages v Pitt [1994] AC 200 Royal Bank of Scotland v Etridge (No 2) [2001] 3 WLR 1021 Discussion Why does contract law recognise the vitiating factors of duress and undue influence? Do we need both? Considering the different types of duress, should there be different tests for them? Problem Roughage & Co are manufacturers of breakfast cereals. They wish to take advantage of the new trend in low fat diets and produce a new breakfast cereal. Roughage & Co have already started designing the packaging for the new cereal, using a company, Grabbit Inc, even though a director of Roughage & Co was locked in the meeting room at Grabbit Inc with its director and five large security people until he signed the contract. Publicity for the new cereal is put in place by Bryan, the advertising director of Roughage & Co. Bryan enters into one advertising contract for £3 million for a full page advert in ‘Knitters’ Monthly’ magazine to promote the new cereal. Knitters’ Monthly’s current circulation figures per year are 150 copies and Roughage & Co need to sell over 10 million boxes of cereals to make the new cereal a success. Bryan and the advertising executive of Knitters’ Monthly belong to the same religious community. Roughage & Co also enter into a contract for the supply of bran for the new cereal with Sludge Plc. Unfortunately the bran is delivered to the wrong storage depot and then stolen. Sludge Plc threatens to withdraw the credit facilities extended to Roughage & Co unless Roughage & Co pays for the stolen bran. The contract between Roughage & Co and Sludge Plc does not state that credit facilities should be available. As there is a worldwide shortage of bran, Roughage & Co pays for the stolen bran. The production of the new cereal is proving far more problematic than Roughage & Co first thought. Roughage & Co now seeks your advice whether they can withdraw from all the contracts without incurring liability. Essay for Discussion “The doctrine of economic duress is now well developed. However, it is still not clear when a lawful threat might be deemed to constitute sufficient pressure to allow a party to rescind the contract for duress.” Discuss. “…relief for undue influence is given… on the ground of impaired judgmental capacity usually arising from morbid dependence on another” (Birks and Yin). Discuss.  TUTORIAL 8 TERMS Essential Reading McKendrick Contract Law chs 9, 13 & 14 Competition and Markets Authority ‘Unfair Terms Flowchart’, available here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/450429/Unfair_terms_flowchart.pdf Please make sure that when you come to the tutorial you have access (online, downloaded, or in your statute books) to the texts of UCTA 1977 and the CRA 2015. Further Reading J Adams and R Brownsword ‘The Unfair Contract Terms Act: A Decade of Discretion’ (1988) 104 LQR 94 S Bright ‘Unfairness and the Consumer Contract Regulations’ in A Burrows and E Peel (eds) Contract Terms (Oxford OUP 2007) 173 S Whittaker ‘Unfair Contract Terms, Unfair Prices and Bank Charges’ (2011) 74 MLR 106 Important Cases L’ Estrange v Graucob [1934] 2 KB 394 Curtis Chemical Cleaning Co [1951] 1 KB 805 Chapelton v Barry UDC [1940] 1 KB 532 Olley v Marlborough Court [1949] 1 KB 532 McCutcheon v MacBrayne [1964] 1 All ER 430 Thornton v Shoe Lane Parking [1971] 2 QB 163 Phillips Products v Hyland [1987] 2 All ER 620 Photo Productions v Securicor [1980] 1 All ER 556 George Mitchell v Finney Lock Seeds [1983] 2 All ER 737 Thompson v Lohan (Plant Hire) [1987] 2 All ER 631 Interfoto Picture Library v Stiletto Visual Programmes [1988] 1 All ER 348 Smith v Eric Bush [1989] 2 All ER 514 DG of Fair Trading v First National Bank Plc [2002] 1 AC 481 OFT v Abbey National [2010] AC 696 Aziz v Caixa d’ Estalvis de Catalunya, Tarragona i Manresa of 14 March 2013 (C-415/11) Kásler v OTP Jelzálogbank Zrt of 30 April 2014 (C-26/13) ParkingEye v Beavis [2015] UKSC 67, [2015] 3 WLR 1373 Discussion In what way does the control of terms conflict with the principle of freedom of contract? Should the law protect consumers? Why/why not? Why do you think the Supreme Court decided in favour of the banks in OFT v Abbey National? Do you agree with the decision? Do you think that the Consumer Rights Act will help to strengthen the consumer protection that was diminished by Abbey? Problem Agata, an avid football fan, wishes to buy a Smart TV to enhance her enjoyment of the season’s football matches. She will also find the new television useful since she is a freelance journalist and occasionally writes television reviews. On 1st December 2015, Agata chooses a Smart TV in her local store, TVeez Ltd, and decides to finance it through a loan with the store. Agata signed the loan agreement without reading it beforehand since it was written in exceptionally tiny print and she did not have her glasses with her. After a few weeks, Agata notices that her monthly loan repayments of £100 have increased by £25 per month. At the same time, bad wiring in the television causes a spark to fly burning a large hole in her wool rug. Agata is furious and telephones TVeez Ltd demanding £500 compensation for the damage to her rug and for her loan instalments to be readjusted back to £100. TVeez Ltd point to two clauses in her contract: TVeez Ltd reserves the right to increase monthly repayment amounts in the unlikely event of an increase in the Bank of England’s base interest rate. For information on the liability of TVeez Ltd for damage caused by the use of any of its products please see our website. When Agata looks at the website she finds a document which states on page 56 that ‘TVeez Ltd limit their liability for any damage to personal property caused by use of its products to £200’. Advise Agata. (Taken from May exam 2016) Essay for Discussion To what extent do you think that the Consumer Rights Act 2015 (insofar as it relates to the control of unfair terms) strikes a fair balance between freedom of contract, on the one hand, and protection of the weaker party, on the other? TUTORIAL 9 PERFORMANCE, BREACH AND FRUSTRATION Essential Reading McKendrick, Contract Law, chs 21 & 22 *You must bring the Law Reform (Frustrated Contracts) Act 1943 with you to the tutorial* Further Reading E McKendrick ‘Frustration, Restitution and Loss Apportionment’ in A Burrows (ed) Essays on Restitution (Oxford OUP 1991) 147 JC Smith ‘Anticipatory Breach of Contract’ in E Lomnicka and CJG Morse (eds) Contemporary Issues in Commercial Law: Essays in Honour of AG Guest (Sweet & Maxwell 1994) 175 Q Liu ‘The White & Carter Principle: A Restatement’ (2011) 74 MLR 171 Important Cases: Taylor v Caldwell (1863) 3 B& S 826 Krell v Henry [1903] 2 KB 184 Herne Bay Steamboat Co v Hutton [1903] 2 KB 683 Metropolitan Water Board v Dick Kerr [1918] AC 119 Maritime National Fish v Ocean Trawlers [1935] AC 524 Davis Contractors v Fareham UDC [1956] AC 696 Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26 White & Carter v McGregor [1962] AC 413 The Eugenia [1964] 2 QB 226 The Mihalis Angelos [1971] 1 QB 164 Schuler v Wickman [1974] AC 235 Johnson v Agnew [1980] AC 367 Photo Production v Securicor [1980] 1 All ER 556 (read Lord Diplock’s speech) Bunge Corp v Tradax [1981] 1 WLR 711 National Carriers v Panalpina [1981] 1 All ER 161 BP Exploration v Hunt (No 2) [1982] 1 All ER 925 (Robert Goff J) The Super Servant Two [1990] 1 Lloyd’s Rep 1 Discussion What are the problems with an entire obligations rule? Why do we need to classify terms? What is the common ground between the doctrines of mistake and frustration? Is there any justification for distinguishing between them? Problem Gladys is about to celebrate her 50th birthday. She is very excited and decides to hold a party at the local village hall and invite all her friends. The village hall costs £500 for the evening, payable 1 day before the event. She also decides she should have authentic food from Northern Pakistan. She went to Northern Pakistan on a trekking holiday when she was 21 and has never forgotten the wonderful food. She decides that the only way to truly re-create the flavour is to import the food direct from Northern Pakistan. She contacts AuthenticFlavours.com, a specialist in unusual food supplies, and they agree to provide all the food direct from Northern Pakistan for £400. She pays £150 as a deposit with the balance due on the night of the party. Gladys also decides she wants a live jazz band to supply the music for the event. She employs Norman & his Jazzy Players to entertain her guests at the party. The band costs £600 which will be paid after the event. Norman & his Jazzy Players hire a rehearsal room in which to practice for the concert. The rehearsal room costs £50. Five days before the event when AuthenticFlavours.com are expecting the food to be shipped from Northern Pakistan, there are tribal insurgence problems in the region so the Pakistani government invade the area. The UK government declare all contracts with Northern Pakistani companies illegal for the foreseeable future. Also five days before the party, Norman (the lead singer of the band) gets very drunk at the rehearsal and falls off the stage. He is knocked out and ends up in hospital for three weeks. The rest of the band suggest they could play at the concert, but Gladys was really hoping Norman would be there, as she has already told her friends that Norman himself will be singing at the concert. Gladys is devastated as a result of all the problems and cancels the party. AuthenticFlavours.com, Norman & his Jazzy Players and the village hall are all insisting Gladys pay them the sums due under the contracts. Advise Gladys. Essay “It is difficult to satisfactorily reconcile Krell v Henry and Herne Steamboat Co v Hutton. Even if a satisfactory explanation is possible, frustration of purpose is so narrowly conceived that the courts are unlikely to find a contract frustrated on this ground.” Discuss. “The consequences of breach of condition are too draconian for the party in default.” Discuss. (LLB Contract Exam May 2012) In your own time, think how to construct an answer to the following question: Lady Puritan commissions Pecassi, a celebrated and popular artist, to paint a portrait of her husband Sir Sleeper for £9000. She pays £500 deposit to allow Pecassi to purchase basic materials to begin his work. Pecassi buys paint, brushes and an easel so he can start work: he spends £350. After the painting is begun, Lady Puritan finds out Sir Sleeper has been having an affair with his secretary, Maureen. Lady Puritan declares that she will have nothing more to do with him and instructs Pecassi to stop work immediately. But Pecassi, encouraged by Sir Sleeper who continues to come for sittings, finishes the picture and delivers it to Lady Puritan together with a bill for £8500. She is furious. Advise Lady Puritan. Would your answer differ is Lady Puritan had not paid a deposit for the painting TUTORIAL 10 REMEDIES FOR BREACH OF CONTRACT Essential Reading McKendrick Contract Law chs 23 & 24 Further Reading D Friedmann ‘The Performance Interest in Contract Damages’ (1995) 111 LQR 628 E McKendrick ‘Breach of Contract and the Meaning of Loss’ [1999] CLP 53 M Graham ‘The Sky’s the Limit: Contractual Damages for Non-Pecuniary Loss’ [2002] LMCLQ 161 Important Cases Robinson v Harman (1848) 1 Exch 850 Lumley v Wagner (1852) De GM & G 604 Hadley v Baxendale (1854) 9 Exch 341 Dunlop v New Garage [1915] AC 79 Victoria Laundry v Newman Industries [1949] 2 KB 528 White & Carter v McGregor [1962] AC 413 Beswick v Beswick [1968] AC 58 The Heron II [1969] 1 AC 350 Anglia TV v Reed [1972] 1 QB 60 Jarvis v Swan’s Tours [1973] QB 233 Parsons v Uttley Ingham [1978] QB 791 Ruxley Electronics and Construction v Forsyth [1996] AC 344 Co-operative Insurance Soc v Argyll Stores (Holdings) [1998] AC 1 Attorney-General v Blake [2001] 1 AC 268 Farley v Skinner [2001] 3 WLR 899 The Achilleas [2008] UKHL 48, [2008] 3 WLR 345 Cavendish Square Holding BV v El Makdessi, ParkingEye v Beavis [2015] UKSC 67, [2015] 3 WLR 1373 Discussion What kinds of loss might be caused when a contract is broken?  Should all losses caused by a breach of contract be recoverable?  Should specific performance rather than expectation damages be the primary remedy for breach of contract?  Problem Andy, a young aristocrat, wanted to buy a country house in Rutland to use as a weekend home. He instructed Bob to survey it, saying to him that he was particularly concerned about noise, as one of the purposes of buying the house was to enable him to relax with his friends at weekends. Bob agreed to survey the house for £800 and to investigate the question of noise. In his report he stated that the property was in good condition and there was no problem with noise. Andy therefore bought the house for £300,000, its full market value. Prior to moving in, Andy also contracted with Clear Blue & Co. who agreed to build a swimming pool at the back of the house that was to be 15m long and 8m wide for £10,000. Andy specifically stated that he wanted the pool to be deep enough to enable him to practise his diving. On moving in to the property Andy quickly discovered that planes from a nearby military base made frequent low level flights over his house. He also discovered that the swimming pool was only 13m long and was not deep enough for diving. The cost of lengthening and deepening the swimming pool would be £8,000. Andy used the house at weekends for six months in which time the aircraft noise substantially impaired his enjoyment of the property. In that time the value of the house dropped to £280,000, the fall in price being due solely to the decline of property values in the area. Andy now seeks damages for breach of contract by Bob, for: The financial loss caused by the fall in value of the house The disappointment, anxiety and distress caused by the noise from the planes He also seeks damages for breach of contract by Clear Blue & Co for the cost of lengthening and deepening the swimming pool. Discuss. Essay Are there any good reasons that justify the general reluctance of the courts to award specific performance for breach of contract? Discuss with particular reference to the decision of the House of Lords in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1. (LLB Contract Exam May 2011) “The law on damages for breach of contract is hopelessly inadequate in protecting the expectations of contracting parties. This shows once and for all why policy considerations should not play a role in contract law.” Discuss. (LLB Contract Exam August 2012) 21 UCL FACULTY OF LAWS JUDICIAL COLLEGE LECTURE, MINISTRY OF JUSTICE, 2016 dr prince saprai 5 15 21