Contract Report 2017 B

Examiners’ reports 2017
LA1040 Contract law – Zone B
Introduction
The Contract law paper followed the same format as last year with a requirement to
answer four questions out of eight, a mix of problem and essay questions and a free
choice as to which to answer.
Timing remains a problem for a small but significant number of students – too many
answer only three questions or write pages for their first question and only two
paragraphs for their fourth question. This inevitably has a huge impact on the overall
mark. It is always disappointing to mark three good answers at 2:1 standard but only
be able to give minimal marks for the fourth, resulting in a very low 2:2 or worse.
Students must be disciplined enough to move on to the next question every 45
minutes – the first marks in a question are far easier to attain than the last.
Another common fault, as in previous years, is to write a pre-prepared answer to the
essay questions – the correct area of law is usually identified but the specific question
posed is not properly addressed. Students are usually being asked to take a view on
a statement and too often they simply provide a factual summary of the law in that
area as if the question had been: ‘Write all you know about frustration/privity/illegality’,
etc. Good marks can only be achieved by properly applying the law to the question
asked.
Finally, by way of general comment, many answers provide a reasonable analysis of
a problem question but fail to support their assertions with the appropriate case law.
Comments on specific questions

Question 1
Adele and Bella are sisters. On 1st February Adele meets her sister for a drink
and tells her she is looking for a new sports car. Bella replies that she wants
to sell her red Ferrari as there is now a better model available and that she is
happy to sell it to her sister ‘on a business basis’. Bella says she wants
‘about £100,000’ for it. That evening Adele sends an email to Bella saying, ‘I
accept your offer to sell the car for £100,000 and will transfer the money in a
few days.’ On 3rd February Bella sends Adele an email that says: ‘Don't be
stupid I wouldn’t sell the car for that, I want £125,000 for it. To avoid any
further misunderstanding, do not email me again unless you do not want the
car at this price.’ Adele was so annoyed on reading the first sentence of
Bella’s email that she deleted it without reading further and did not reply.
Three weeks later Bella rang Adele and demanded £125,000, offering to
deliver the car.
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Advise Adele.
How, if at all, would your answer differ if, upon reading Bella’s email on 3rd
February, Adele decided to purchase the car for £125,000 and Bella now
refuses to deliver it?
General remarks
This question was answered by most students. It was reasonably well done but many
lacked case law to support their analysis. It required a logical analysis of each of the
communications between A and B to consider at each stage whether it amounted to
an offer or an acceptance, with reference to well-established case law, and ultimately
whether a contract was formed.
Law cases, reports and other references the examiners would expect you to use
As A and B are sisters, consider whether there is an intention to create legal
relations. Balfour, Jones v Padavatti, etc. Rebutted here as there is reference to a
‘business basis’ Merritt.
Then analyse the communications: Feb 1: B to A saying ‘I want about £100,000 for
it’ is an invitation to treat (ITT) Gibson v MCC. Feb 1 evening: A to B email probably
an offer to purchase although phrased as an acceptance. The law looks to the
substance not the form of communications Hyde v Wrench. Discuss status of email
communication. Feb 3: A to B counter offer Hyde v Wrench. Consider effect of
counter offer destroys previous offer. B’s ‘silence’ after Feb 3 is not evidence of
acceptance. Consider Felthouse v Bindley and Rust v Abbey Life. No contract
concluded.
For the alternative scenario, good students will recognise that a contract could
possibly be concluded as there are limits to the so-called rule that silence cannot
constitute acceptance if the offeree agrees.
Common errors
The most common error was not correctly identifying that B’s statement of ‘about
£100,000’ was an ITT rather than an offer as the price lacked certainty. It is
reasonable to discuss whether or not it is an offer, with use of authorities but if
incorrectly assessed as an offer then it makes analysis of the rest of the question
flawed. If logically followed through then misidentifying the initial statement is not
fatal. However, to make the question work many students tried to argue that a
contract had been formed at the outset and then ‘revoked’ – only an offer can be
revoked not a contract itself – which showed very muddled thinking and was a
serious error. Most missed the issue in the alternative scenario about waiving the
right to communication. Easy marks were missed by the many students who failed
to notice the ‘sisters’ point and therefore didn’t discuss intention to create legal
relations.
A good answer to this question would…
use a clear and logical structure to consider each interaction between A and B in turn,
speculate as to the possible status of each and state clearly and with relevant case
law authority to support their argument whether it was an offer or ITT or acceptance,
picking up the cases outlined above and as evidenced in the extract below.
Poor answers to this question…
made the key error identified above in not recognising the first interaction as an ITT,
which created an illogical and muddled overall response. Also, many students wrote
a page or two about general principles of offer and acceptance – talking about
unilateral contracts, auctions, adverts, etc. – often supported with examples and
case law but of absolutely no relevance to the problem question posed. Knowledge
of the law should be demonstrated by a thorough analysis of the question, not a
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generic answer describing offer and acceptance. No marks given for irrelevant
material however comprehensive.
Student extract
The courts would ascertain the intentions of contracting parties objectively by
assessing their words used. Following Gibson v MCC and Scammel v
Ouston, it might be submitted that the word ‘about’ might suggest that B’s
statement is just an ITT, given that it was vague in nature and there is still
room for negotiation. So, when A sent an email to B and said that she would
buy the car at £100,000 and transfer the money in a few days it would
amount to an offer, Storer v MCC. That makes A the offeror in this case.
The next step would be whether B accepted the offer made by A. She said
that she wanted £125,000 for the car and this could not be valid acceptance.
Acceptance is defined by Prof Treitel as an unconditional assent to all the
terms of the offer, as a mirror image of the offer (Hyde v Wrench) and the
acceptance must be communicated to the offeror (Powell v Lee) to be valid.
Looking into the facts, the price is different with the proposal by A and
therefore it would be a counter offer (Hyde v Wrench) and the counter offer
would terminate the original offer made by A.
Another problem arises in this question in that B’s counter offer requires
silence acceptance as it stated that ‘do not send me email unless you do not
want the car at this price.’ Following Felthouse v Bindley silence could not
amount to valid acceptance because the offeror could not impose the burden
on the offeree to speak up. On the other hand, in Re Selectmove (obiter)
Gibson LJ stated that if the offeree himself placed the burden on himself to
speak up, he is undertaking himself to speak up if he does not want to
conclude the contract.
In this case, it was the offeror, B, who requested for silence acceptance
following Felthouse. Silence would not amount to valid acceptance.
Comments on extract
This extract is from a much longer answer, which was awarded a first class mark
(And the student scored a first overall on the contract paper.) It demonstrates the
logical analysis required and appropriate use of relevant case law.
Question 2
Discuss TWO of the following statements:
a) A ‘mere’ increase in costs will never operate to frustrate a contract.
b) It is never possible to revoke a unilateral offer once the offeree has
begun performance of the stipulated act.
c) Damages for breach of contract are always assessed by reference to
the ‘cost of cure’ rather than any ‘diminution in value’ caused by the
breach of contract.
d) Specific performance is not available when damages would be an
adequate remedy.
General remarks
Not a very popular question, although for those that attempted it properly there was
an opportunity to achieve good marks. The biggest issue was failing to follow the
instruction to answer two out of the four questions. Some answered all four (in which
case all four parts were marked and students were scored on the best two); this
wasted time and resulted in answers that were too superficial. A pass mark was
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difficult to achieve. More seriously, some only answered one question – making it
impossible to obtain a pass – a student would have to score 80% on the one
subsection they answered to gain a bare pass on question 2 overall. The two sections
carried equal weight so answers needed to be of similar length and content to achieve
a good overall mark.
Whichever sections were answered, it was important to get a balance between
description and criticism.
a) Consider especially Davis v Fareham and the ‘Suez’ cases.
b) Consider Errington and Daulia. Better answers will realise that this is an
overstatement as the rule according to Luxor v Cooper depends upon the
implication of a term.
c) The two different bases for assessment should be clearly distinguished.
Ruxley is the obvious starting point, which clearly contradicts the statement.
d) The so-called ‘bar’ to specific performance that damages are an adequate
remedy could be discussed by reference to cases involving ‘unique’ goods
such as Behnke v Bede and the Bronx Engineering case as well as the
‘standard’ approach to contracts for the sale of land.
Common errors
a) A popular choice but many simply wrote a descriptive essay about
frustration (often repeated almost identically in answer to Q8 on the paper).
A proper discussion of the above cases was needed to obtain a good mark.
b) Again a common choice and answered reasonably well but often failed to
focus on revocation: long descriptions of the Carlill case were not helpful.
c) Poorly answered – many omitted to discuss Ruxley at all and there was
little critical analysis of the statement in the question.
d) Very few answered this and those who did made very poor attempts. There
was no reference to the above cases and many seemed to have little
understanding of what specific performance is and how it operates.
choose two subsections and analyse and criticise or support the statement in that
section with reference to well-established case law, focusing on the narrow element
of the area of law identified.
consisted of the students writing all they knew about frustration/unilateral
offers/damages/specific performance respectively.
Question 3
Devi is a self-employed dress designer. Her old computer breaks down just as
she is completing a design sketch to send to a client. She rushes to Office
Supplies to buy a new computer to use in her business. She decides to buy a
new desk top computer for £2,000. She asks Erich, the sales assistant, if it is
a good computer and whether it will run specified software which is used for
clothes design. Erich says that all computers sold are tested in store before
being put on the shelf for sale and that he knows it will run the specified
software. Devi signs an agreement to purchase the new computer which
contains the following terms:
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1. Office Supplies will not in any circumstances be liable for physical

injury caused by its products.
2. Office Supplies will not be liable for any damage to property caused
by its products.
3. Any other liability of Office Supplies resulting from the sale of
defective goods shall be limited to ten times the value of the goods
sold.
As Devi leaves the store she passes and reads a large sign that says:
‘We sell computers at the lowest possible price and so all goods sold in
this shop are sold without any warranty as to quality.’
When she gets back to her office she finds the computer will not run the
specified software. When she returns to the office the next morning she sees
that the computer is overheating. As she approaches, it explodes and burns
her arm and expensive cashmere coat. She also suffers some loss of
business while she locates a replacement computer.
Advise Devi.
General remarks
The question is about express and implied terms and exclusion or limitation
clauses. Students should note at the outset that this is a B2B contract and so UCTA
1977 and not the CRA 2015 will apply. Marks are given for good technique in
answering the question especially those who try to identify what liability would arise
without the relevant clauses, before considering the effect of the different clauses.
Many jumped straight in to how the exclusions work without considering what
claims are possible.
The contract is for the sale of goods so consider SGA 1979 SS 14(2) (satisfactory
quality) in relation to the overheating and ss.13 (description) and 14(3) in relation to
the compatibility with the specified software (also possible liability for breach of an
express assurance). The identifiable losses suffered by D include the physical injury
(burnt arm), damage to property (coat), the amount paid for a useless computer and
some loss of business. Only then consider the effect of the various clauses.
The sign at the exit will have no effect as it is notified too late Interfoto, Olley v
Marlborough Court. The terms are signed so other clauses incorporated
(L’Estrange). Use UCTA, not CRA: damage to Devi’s arm (clause 1) consider
UCTA, s.2(1); damage to Devi’s coat (clause 2) consider UCTA, s.2(2); for
exclusion of other losses consider UCTA, s.3(2); for all losses where recovery is
based upon breach of a statutory implied term consider UCTA, s.6; when
discussing UCTA ss.2(2) and 6, consider the standard of reasonableness in s.11
and Sch.2.
Common errors
Failing to identify that Devi was buying a computer for her business and so was not
a consumer. The whole question was then addressed using the wrong legislation
(CRA rather than UCTA). Also, many wasted time talking about possible
misrepresentation by the shop assistant, Erich, when the key claim would be for
breach of contract not misrepresentation.
analyse the problem as outlined above in logical and clear steps supported by
relevant case law and statute. Good students will note the significance of clause 3
being a limitation as opposed to an exemption clause and also the developing
approach of allowing commercial contractors of equal bargaining power greater
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latitude in the application of these rules. The best answers may question the
application of this factor to the circumstances of a small business such as Devi’s.
talked only about the exclusion clauses and not the potential substantive claims for
breach and/or used the CRA rather than UCTA and/or wrote pages about
misrepresentation.
Question 4
The Nice Girls are a successful pop group. On 1st January they enter the
following contracts:
a) With Simon, to act as their manager for a year at a salary of £100,000.
b) With Whinger, to join the group as a new singer at an annual salary
of £300,000.
c) With Edith, to act as Deputy Sound Engineer at an annual salary of
£30,000.
All the contracts further provide that they can be terminated by either side
with one month’s notice.
On 1st February the Nice Girls offer to pay Simon an extra £50,000 after they
hear a rumour that he wants to leave them to start a TV show. At the same
time, they tell Whinger that they are disappointed with the public reaction to
her joining the band and so they want to reduce her salary to £150,000.
Whinger agrees because she thinks the group will otherwise terminate her
contract and she needs money to pay for her boyfriend’s drug rehabilitation
programme. Also on 1st February Edith says she wants to leave immediately
unless she is paid more money. The Nice Girls realise that protesting will
make no difference and cannot find a replacement before their World Tour
begins on 1st March. Therefore, they agree that Edith will be promoted to
Chief Sound Engineer at a new annual salary of £45,000.
The World Tour is a great success but when it is completed on 1st June the
Nice Girls tell Simon and Edith that they will no longer pay them the increased
salaries. Whinger is demanding to have her salary paid at the original rate and
says she is entitled to the balance of the ‘underpayments’ made for February
and March.
Advise the Nice Girls.
General remarks
This was quite a difficult problem question and was poorly answered by many.
Students needed to identify that this question raised issues of modification not
formation. While many did identify that the question centred on issues of
consideration, the various concepts were often poorly explained or applied to the
wrong parts of the question. Each of the three individuals who have a contract with
the Nice Girls needs to be considered in turn to determine the liability of the Nice Girls
for the higher payment in each case. Poor structure and muddled thinking caused
marks to be lost.
In relation to Simon
Is the salary increase supported by consideration? Discuss Stilk v Myrick and
especially Williams v Roffey where, as here, there was no threatened breach of
contract by Simon. For this reason, there is no evidence of economic duress – the
increase was offered by Nice Girls without any demand from Simon and the Nice
Girls received a practical benefit by retaining his services.
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In relation to Whinger
Is the salary decrease supported by consideration? In the past the CA had held that
Williams v Roffey had no application to ‘reducing’ modifications (Re Selectmove)
but strong answers will be aware of the change effected in MWB v Rock (2016).
Does Whinger get a practical benefit sufficient to be consideration by retaining the
benefit of continuing employment? If so, consider whether the reduction was
nonetheless obtained by economic duress. Discuss the requirements of the
doctrine: Did the Nice Girls threaten to breach Whinger’s contract? If so, did she act
under compulsion, consider the relevance of: protest, the existence of alternatives,
etc. as discussed in Pao On, Atlantic Baron.
In relation to Edith
The salary increase is supported by consideration even under the old Stilk
approach because of the promotion. Then consider the requirements of economic
duress as above especially the absence of protest, Atlas v Kafco.
Common errors
Very few came close to identifying the issues identified above. Many wasted time
discussing offer and acceptance. The salary decrease for Whinger caused
particular confusion. Many were able to describe the principles of Stilk v Myrick and
Williams v Roffey but less able to apply them accurately to the scenarios. Any
discussion of the principles of duress was often lacking.
analyse each of the scenarios as outlined above with supporting case law and reach
clear conclusions about whether the promise payments were payable or not and why
that was the case.
just described concepts of consideration and may have mentioned some of the key
cases such as Williams v Roffey but without applying them in the correct context.
Question 5
Colin is the Manager of the Barton Bulldogs, a second division football club.
He has three ‘star’ players: Lionel, Pepe and Mario.
In June Colin calls Romeo, the owner of Neverton, a Premier League football
club. He tells him all three players are for sale. He describes Lionel as being
at ‘the top of his game’ and having ‘the finest ball skills of his generation’, he
says that Pepe is ‘in superb condition’ and that Mario is ‘utterly dependable’.
Romeo immediately offers to buy Lionel for £20M. Romeo does not know
much about Mario but offers to buy him as Colin ‘only’ wants £5M for him.
Colin immediately accepts both offers.
Romeo takes a month’s holiday on his yacht where he cuts himself off from
all news. Consequently he does not hear that Pepe was involved in a car
accident and suffered leg injuries. Romeo’s first act on returning to the UK is
to ring Colin and offer £10M for Pepe which Colin quickly accepts. Romeo
soon learns about the car accident and is furious.
When Lionel starts training with Neverton it becomes clear that he has a
‘balance problem’. This condition was disclosed in a medical questionnaire
which Lionel completed and which was sent to Romeo (but which he never
read) when Romeo had previously enquired about purchasing Lionel. Further,
it is discovered that Mario has a long standing drink problem and so often
misses training at Neverton as he regularly did when he was at Barton
Bulldogs.
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Romeo seeks your advice as to what remedies for misrepresentation he may
be entitled to in respect of the purchase of Lionel, Pepe and Mario. He also
asks what the consequences would be if he were to resolve Mario’s drink
problems over the forthcoming season before taking any action for
misrepresentation.
General remarks
A popular question and generally well answered. But too often it presented as a
standard essay about misrepresentation rather than applying that knowledge to the
specific facts. The final paragraph of the question specifically requires students to
consider the remedies for misrepresentation so no credit is given for discussing
possible breaches of contract, etc.
An analysis of the possible misrepresentations in respect of each of the three players
is required and it is best to divide the response into three sections.
Purchase of Lionel
Consider the nature of the representations: ‘top of his game’ = puffery but ‘finest ball
skills’ is probably a statement of fact. Further, it is spoken by someone with expert
knowledge of the player, Esso v Mardon, Bisett v Wilkinson meaning, although
ostensibly an opinion, it could be treated as an implied statement of fact. Roman’s
failure to read the medical questionnaire will not affect the availability of a remedy in
misrepresentation according to Redgrave v Hurd. Consider whether any bars to
rescission – probably not. Consider best route for Roman to recover damages –
Misrepresentation Act, s.2(1) would give the benefit of a reverse burden of proof
Howard Marine and the fraud measure Royscott v Rogerson.
Purchase of Pepe
Consider the nature of the representation. The statement as to his condition was
true when spoken but became untrue before the contract was concluded so
consider With v O’Flanaghan and Aprillia v Spice Girls. Consider availability of
rescission and damages. Again, the Misrepresentation Act, s.2(1) damages offer
advantages, as above.
Purchase of Mario
Consider the nature of the representation. There is an untrue statement of fact and
the statement would seem to have been made fraudulently. The required mental
state should be outlined and referred back to Derry v Peek. The Misrepresentation
Act, s.2(2) does not affect fraudulent misrepresentation. If Roman waited before
claiming, consider the possibility of losing the right to rescind through lapse of time,
Leaf v International Galleries, although this will not apply to a fraudulent
misrepresentation. Consider also possible affirmation, Peyman v Lanjani.
Common errors
Spending too long at the start discussing whether these were terms or not when the
question asked for a discussion of misrepresentation. Not distinguishing the three
scenarios and writing a general description of misrepresentation. Omitting any
discussion of remedies – both damages and rescission. Most missed the final
question about the effect of delaying action.
analyse each of the three examples independently going through in each case the
nature of the statement, whether it was fact or opinion, case law in support of the
particular issue (e.g. knowledge of Colin, failure to check facts, change of
circumstances, etc.) then consider possible remedies under the different heads of
misrepresentation, the measure of damages and any bars to rescission.
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failed to do any of that and instead wrote a pre-prepared answer about
misrepresentation.
Student extract
Firstly regarding the statement made about Pepe, while it might be true that
he was ‘in superb condition’ at the time of the negotiation, the statement
became fraudulent after the circumstances changes – Pepe suffered from leg
injuries in a car accident. The law states that Colin is under a duty to disclose
according to the principle of changing circumstances – With v O’Flanagan.
Besides Colin might argue that the statements made were merely opinion but
not facts. Following Esso Petroleum v Mardon, opinions made by an expert
could amount to facts.
Colin might argue that there is no reliance on the statement made about
Mario because Romeo did not know much about Mario but was only attracted
by the low price. Following Edgington v Fitzmaurice the law said that partial
reliance would suffice and the misrepresentation need not be the sole reason
to enter into the contract. In light of the above the conclusion is that the
misrepresentation is actionable and the effect is that the contract is voidable.
Romeo will seek to rescind the contract and claim damages for his losses. No
bars to rescission (i.e. affirmation, lapse of time, restoration) applied in this
situation and Romeo can likely rescind the contract. Romeo would also want
to claim damages and damage could be claimed under the Misrepresentation
Act (MA) s.2, tort of deceit or tort of negligent misstatement. Romeo is
advised to reply on MA s.2 because it is less demanding to prove and the
damages are more extensive as under the tort of deceit.
Regarding the contract to buy Mario, the statement might be fraudulent. Tort
of deceit measure is available for fraudulent misrepresentation and Romeo
would bear the burden of proof that Colin made the fraudulent statement
knowingly or at least recklessly – Derry v Peek. The burden of proof is heavy.
Measure of damages under tort of deceit covers all losses directly flowing
from the misrepresentation even if unforeseen – Doyle v Olby. Given the
heavy burden Romeo may not succeed. Therefore s.2(1) MA would be a
more beneficial because it is subject to the reverse burden of proof. Colin
would be liable for damages unless he can prove the statement made
(objective limb) and he indeed believed it when making the statement
(subjective limb).
Comments on extract
A section from a much longer answer that received a high 2:1 mark overall.
Demonstrates clear and methodical analysis with supporting and relevant case law
and a thorough description of remedies and measure of damages.
Question 6
‘The law governing the situation where parties enter a contract on the basis of
a common mistake is unnecessarily complex.’
Discuss.
General remarks
Not a particularly popular question. Those that read the question properly and
discussed common mistake in detail scored well. Too many fell into the trap of
writing a generic essay about the law of mistake and wasted valuable time writing
about mistaken identity for which no credit could be given.
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It is important for students to define and limit their answer to the law relating to the
effect upon a contract of a common, in the sense of shared, mistake. The different
categories of mistake within the wide definition of a common mistake would include
mistake as to the existence of the contractual subject matter, Couturier v Hastie and
McCrae v Commonwealth Disposals Commission and mistake as to some quality of
the contractual subject matter, Bell v Lever Bros, Leaf v International Galleries and
Great Peace. The effect the Sale of Goods Act 1979, s.6 should also be discussed.
Common errors
To fail to understand or properly explain what a common mistake is, as opposed to
other types of mistake. To write extensively about unilateral mistake in the form of
mistaken identity.
describe accurately and with relevant examples the nature of common mistake in its
various forms, paying particular attention to the narrow principles in Bell v Lever
Bros and the evolution through the doctrine of mistake in equity, AJB v Credit du
Nord and Solle v Butcher, until the decision in Great Peace.
just described mistake in all its forms with little explanation or use of relevant case
law.
Question 7
Advise whether a contract is enforceable under any of the following
alternative circumstances:
a) Roger’s neighbour Sadiq has an untidy garden which Roger does
not like and so Roger mows Sadiq’s lawn and tidies the garden.
When he gets home, Sadiq is pleased and says he will pay Roger
£20 but later refuses to do so.
b) Thierry promises to pay Ursula £200 in exchange for Ursula’s
promise to trim all Victor’s hedges.
c) Wade has failed his biology degree. Despite legal advice that the
claim cannot succeed, Wade threatens to sue the university in
negligence as he believes poor teaching caused him to fail. The
University says it will pay Wade £1,000 if he withdraws his threat.
d) XaXa promises Yolanda, the village police constable, £100 if she
keeps a special watch on her cottage while XaXa is on holiday.
e) Professor Zen’s contract requires him to ‘clap loudly’ as each
student is presented for their degree at graduation. Before the
graduation ceremony Professor Zen promises a student’s father
that he will clap loudly in exchange for the father’s promise to pay
Professor Zen £100.
General remarks
This is a question about consideration in its various forms, with each subsection
raising a different rule to explain and apply to the factual scenario. All subsections
had to be answered to obtain a good mark and each had equal weight. Disciplined
timing and exam technique was therefore needed to ensure the best mark and, once
again, too many students let themselves down by spending too long on one or two
sections and giving very short (or no) response to other sections.
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a) Consider past consideration Eastwood v Kenyon, Lampleigh v Braithwaite
etc.
b) Consider the Currie v Misa basic definition of consideration, which
recognises as consideration either a benefit to the promise or a detriment to
the promisor. Here, Ursula’s undertaking is undoubtedly a detriment to her
although less obviously a benefit to Thierry. Consider the fact that Victor is
a third party.
c) The undertaking to give up a claim that the prosecutor wrongly but in good
faith believes to be well founded is good consideration, Cook v Wright.
Giving up a claim that is known to be bad discloses no good consideration,
Wade v Simeon. Only very strong answers will appreciate this distinction
and apply it here.
d) Consider whether the promise to perform a duty already owed under the
general law – a public duty – is good consideration Glasbrook and the
football cases: Harris and now Leeds United v Chief Constable of West
Yorkshire.
e) Consider whether the promise to perform a pre-existing contractual duty
owed to a third party (the university) is good consideration, Stilk v Myrick.
Common errors
Most answered parts (a), (d) and (e) reasonably well but had more difficulty with
spotting the issues in (b) and (c). There was a failure to notice that V was a third
party in (b) and there were discussions about duress in (c) that were not relevant.
Some answers overall missed the whole notion of consideration and discussed offer
and acceptance
give equal weight to all parts and clear case law examples in support of the
principles as outlined above.
missed some subsections out and/or failed to spot the key principles to apply and/or
had learned the ‘rules’ about consideration and could set them all out but failed to
apply them to the correct scenarios.
Student extract
(a) The issue of this case is about past consideration, whether Roger is
entitled to the £20 which he was promised for mowing Sadiq’s lawn and
tidying the garden. In re McArdle, one of the daughters paid the
refurbishment expenses for the house, afterwards the mother promised to
pay, but the court decided that the contract is not enforceable given the
action is past and promise given for action that had been done.
In Roscorla v Thomas even guarantee after the sale is not enforceable again
it is past consideration, no consideration is made for the guarantee. Based on
these two case authorities, Roger mowed the lawn and tidied the garden for
Sadiq. It is unknown if Sadiq knew about it before the act. Based on the past
consideration principle Roger cannot claim the £20.
Exceptions are laid down by Pau On v Lau Yiu Long:
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1. Templeman v Braithwaite – the act was made on request of
the promisor
2. Re Casey’s Patent – both parties known and expected there
is consideration/benefit conferred
3. The consideration is legally enforceable as promised in
advance.
For Roger it seems there has been no request or promise made before his
act so the promise to pay £20 is not enforceable.
(d) The issue here is contractual duty required by law. As a village police
constable, Yolanda is to protect the individuals and properties in the village
as it’s her legal duty to do so. But XaXa offered Yolanda £100 to provide
special watch on her cottage while XaXa is on holiday. This special watch is
on top of the duty of Yolanda as a village police constable. According to
Glasbrook v Glamorgan and Huntley v Sheffield United FC, additional
protection required from the police out of their ordinary duty can be
consideration and so the contract would be enforceable so Yolanda can claim
the £100.
Comments on extract
The two subsections above were answered concisely and correctly with supporting
case law as part of the complete Q7. A little more detail could have been given and
more case law examples but all sections were answered in a similar way with the
correct principles spotted each time achieving a low 2:1 overall. Consistency is
crucial over all parts – better to have five short but accurate answers to Q7 rather
than three long answers and two missing answers.
Question 8
‘The Law Reform (Frustrated Contracts) Act 1943 made fundamental changes
to the positions of parties to a contract that is frustrated.’
Discuss to what extent the above statement is true and whether any changes
made by the Act have improved the law.
General remarks
This was a fairly popular question but often answered in the form of a pre-prepared
essay about the history of frustration. A number of students effectively wrote the
same answer here as they did for Q2(a) – while both questions were about
frustration, they required a very different approach as they addressed different
aspects of the doctrine. A well-structured answer focusing on the impact of the 1943
Act and able to comment and criticise could achieve a high mark.
This question required the student to outline the position of parties at common law
when a contract is frustrated (including in particular the Fibrosa case) before
considering how that has been changed by s.1(2) and 1(3) of the 1943 Act. Strong
answers distinguished themselves by the sophistication of their criticisms of the
1943 Act.
Common errors
Writing long descriptive passages reciting the detailed facts of old cases about how
and when a contract is deemed to be frustrated – the question asks the student to
focus on the position of parties to a contract that is frustrated – i.e. the consequences
of a frustrating event. Too many essays only mentioned the Act very briefly at the end
or simply copied out the exact statutory provisions.
12

describe how the parties suffered in the past as a consequence of a frustrating event
– they were deemed to have assumed a risk and the losses lay where they fell at the
point of the frustrating event leading to significant injustice – giving clear examples
from case law. Then critically evaluating the impact of the Act, discussing the
discretion given to the court in assessing where losses should fall and the
complexities of s.1(3) in determining a ‘valuable benefit’ and a ‘just sum’.
fell into the errors described above with limited discussion of the Act.
Student extract
There is also another key issues about the remedies (damages) claim for
parties. In common law, per Chandler v Webster, the principle ‘loss lies
where it falls’ provides that the price paid is not recoverable and the costs to
be paid cease to be paid. This creates unfair situations for the parties.
Although later development in Fibrosa considers ‘total failure of
consideration’ the situation is still not satisfactory.
The Law Reform (Frustrated Contracts) Act 1943 – provided a formal statute
for the parties to rely on in a frustrated contract situation. The Act especially
reformed the compensation claims, i.e. s.1(1) – all sums paid or payable to
any party in pursuance of the contract before the frustrating event is
recoverable. Therefore, according to the Act, a payment made before the
frustrated incident can be recovered, like in the case of Taylor v Caldwell or
Krell v Henry – the down payment of one party can be recovered from the
other.
Whilst s.1(2) clause provides recoverable provisions to offset the expenses
incurred by the other parties, as in Gamerco SA v ICM.
Also in s.1(3) the party who has obtained a practical benefit can be claimed
as in BP v Hunt – the court would evaluate the practical benefit Hunt obtained
for his share of the oil refining and compensate BP for the losses to prevent a
situation of unjust enrichment.
Comments on extract
This is a short passage from a much longer essay, which achieved a low 2:1 overall.
Good points made above with a relevant case in support of each point.
13

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Examiners’ reports 2017

Examiners’ reports 2017

LA1040 Contract law – Zone B

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