Topic 1 Intention to create legal relations = Commercial agreement have (Esso Petroleum Ltd v Commissioners of Customs and Excise) - Family and friends do not have (Balfour v Balfour) - Issue: whether it is an offer or an invitation to treat - Show an intention to be bound (Storer v Manchester CC; Gibson v Manchester CC) - Display of goods: invitation to treat (Pharmaceutical Society v Boots; Fisher v Bell; Partridge v Crittenden) = Exception: unilateral contract (Carll v Carbolic Smoke Ball) Acceptance - Issue: whether there is a valid acceptance = ‘Mirror-image’ : counter offer kill off the offer (Hyde v Wrench) - Mere request for or supply of information not a counter offer (Harvery v Facey: Stevenson, Jacques & Co v McLean) - Acceptance in ignorance of the offer: not an acceptance (R v Clarke) = No acceptance by silence (Felthouse v Bindley) = Battle of forms: last shot doctrine: the final form — last communicated version (Butler Machine v Ex-Cell-O Corp) = Not prescribed method of acceptance: not disadvantage then effective (Manchester Diocesan Council for Education v Commercial and General Investments Lid) = _ Issue: whether the acceptance is effectively communicated - Postal rule: effective when the offeree posts her acceptance even if itis not received by the offeror (Adam v Lindsell) - Exception: manifest inconvenience and absurdity; if expressly or impliedly excluded in the offer — not apply postal rule (Holwell Securities Ltd v Hughes) - Two-way instantaneous: effective when and where it is actually brought to the attention of the offeror (Brinkibon v Stahag Stahl) - One-way instantaneous: effective when a reasonable offer would access the message in all the circumstances (e.g. ordinary business hours (Tenax SS v The Brimnes) = Electronic means: arrived in the server inbox; not designated method: comes to the actual knowledge (Electronic Transactions Ordinance s19(2)) ~ Issue: whether the revocation of offer is effective - Any time before the offeree communicates her acceptance; need to be communicated (Byme v Van Tienhoven) ~ Unilateral contract: not be revocable if the offeree has started performance (Errington v Errington)= Can be communicated by a third party (Dickinson v Dodds) Consideration - Issue: whether there is a valid/sufficient consideration - Consideration must move from the promisee, must herself provide consideration for the promise — need not move to the promisor (can move to a 3rd party) (Tweddle v Atkinson) - Consideration must be requested by the promisor (Combe v Combe) - Past consideration is not good consideration (Re Mcardle) - Exceptions: act done at the request of the promisor (Lampleigh v Brathwaite; Pao On v Lau Yiu Long) - Consideration need not be adequate but sufficient: something valuable in the eye of the law (Thomas v Thomas; Chappell v Nestle) = _ Issue: whether the variation of contract is supported by consideration - Pre-existing duties: no consideration (Collins v Godefroy) - Exceptions: more is promised — consideration V (Glasbrook Bros v Glamorgan CC) - The same for more (promisor pay more for the same performance from the promisee) = Traditional: no consideration (Stilk v Myrick) = Traditional exceptions: give something more than she was obliged— V consideration (Hartley v Ponsonby) + Practical benefit is valid consideration (Wiliam v Roffey) — gaining extra commercial benefit (** invalid if economic duress or fraud) - Less for the same: accept part-payment in discharge of the whole debt - Traditional: no consideration (Pinnel’s case; Foakes v Beer; Re Selecimove) - But: further benefit is a good consideration (e.g. earlier payment) - Exceptions: practical benefit (MWB v Rock) - See consideration — if no, practical benefit — if no, promissory estoppel Promissory estoppel - Issue: whether (D) may raise the defence of promissory estoppel = 1) Clear and unequivocal promise (Woodhouse v Nigerian Produce Marketing Co Ltd) ~ Test on certainty:whether the representation would have misled a reasonable party (Crown Melbourne Lid v Cosmopolitan Hotel Ltd) - _2)Whether (d) has relied on the promise made by (c) (Hughes v Metropolitan Railway; High Tree case; Collier v Wright) — unable to resume her original position due to the reliance, if can + no inequity (The Post Chaser) = 3) inequitable to go back on the promise (D&C Builders v Rees)= 4) cannot serve as a cause of action (Combe v Combe; Baird Textile Holdings Ltd v ‘Marks and Spencer; Australian Approach: Walton Stores v Maher) Terms and representation - Issue: whether (__) is a term or a mere representation = 1) importance of the truth of the statement (Banner v White; Couchman v Hill) - 2) Special knowledge; in a better position to ascertain the truth (Oscar Chess v Wiliams; Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd; Ko Ching Fung v Fulltin Investment Ltd) = 3) request to verify (advise the buyer to verify its truth) (Ecay v Godrey; Schawel v Reade) - 4) Initiation or mere passing on (originator of the false statement) (Routledge v McKay; Oscar Chess) + 5) Formal recording Parol Evidence Rule - Contract parties are barred from adducing extrinsic evidence to add to, vary, or contradict a document which purport to record the parties’ agreement - Exceptions: V for interpretation of terms; V implied terms; V variation of contract; V vitiating factors; V collateral terms Collateral Terms: depend on the parties’ intentions: that the written contract not containing the full intention Exception: Entire agreement clause: exclude the finding of collateral terms; but cannot exclude the liability for misrep Issue: whether the express term is effectively incorporated into the contract by __ - 1) by signature: person bound by the signature whether or not she has read or understood the terms (L'Estrange v Graucob) - Exception: - non est factum (Foster v Mackinnon; Saunders v Anglia Building Society) - Misrep: (Curtis v Chemical Cleaning and Dyeing Co) - The document is not a contractual document (Grogan v Robin; Chapelton v Barry Urban District Council) - 2)by reasonable notice = Given at or before contract formation: (Thornton v Shoe Lane Parking Ltd) - Ina document intended to have contractual effect (see above) - Reasonable notice: more onerous terms, need more steps to bring their significance to the other party's notice (Parker v South Eastem Railway Co; Thompson v LM & S Railway Co; Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd) - 3) by previous dealings or custom: regular and consistent course of previous dealings (Hollier v Rambler Motors; McCutcheon v David MacBrayne) / custom of the relevant trade (British Crane Hire Corp Lid v Ipswich Plant Hire Ltd)Implied terms = _ Issue: whether the implied terms are incorporated into the contract by + 1) by fact = Business efficacy: The Moorcock (without the implied terms, the contract will lack ‘commercial and practical efficacy) = Officious bystander: Shirlaw v Southem Foundries (what a reasonable person who had knowledge of the relevant background would interpret) - 2) by law (see SOGO p.43) - 3) by custom 4) by courts Exemption of Liability = The rule of construction approach: the more unreasonable the result, the less likely it is that the parties could have intended it. —> very clear word is needed (Photo Production v ‘Securicor Transport) - Contra proferentem: ambiguity construed against the party who introduced + relied on it (George Mitchell v Finney; Persimmon Homes Ltd v Ove Arup and Partners Ltd) Distinction between Total Exclusion and Limitation clause - Less hostile towards limitation clause than total exemption clause (Ailsa Craig Fishing Co v Malvern Fishing Co) Exemption of negligence liability + Canada Steamship = 1) Does the exemption clause expressly refer to negligence liability? - 2) Are the words wide enough to cover negligence? Limit: effective; total exclusion: see 3 - 3) can the exemption relate to liability other than negligence? (Alderslade v Hendon Laundry Ltd; Holler v Rambler Motors) - CECO (see P.51- 54) Issue: whether __ can rely on the exemption clause ‘Sub-issue 1; whether the exemption clauses are incorporated into the contract (signature, reasonable notice, previous dealings) ‘Sub-issue 2: whether the exemption clauses cover the breach and exempt liability under ‘common law - All exemption clauses are interpreted contra proferentem, not just ambiguous (Wallis, Son and Wells) - Canada Steamship (in case of negligence)- Exceptions: investor Compensation Scheme case: the contract is commercial and the terms are reasonable, the court should interpret the terms fairly for equal bargaining power — treat no difference to any other contractual terms = Photo Production: if the terms are clear and fairly susceptible of one meaning only > should give effect ‘Sub-issue 3: whether the Control of Exemption Clauses Ordinance applies and exempt liability under CECO - 1) whether is dealing as consumer! trading on standard terms - 2) whether the exemption clause is effective - 3) whether the exemption clause satisfy the reasonableness test Misrepresentation ~ Issue 1: whether itis a term or a mere representation (see above) - “MO s2: a term (warranty) can be treated as a representation — if termination cannot — consider suing misrep - Issue 2: whether there is an actionable misrep = Sub-issue 1: whether itis a false statement of fact or law, or statement of opinion or intention = Without special knowledge (reasonable ground to believe in its truth) statement of opinion (Bisset v Wilkinson; Smith v Land & House Property Corp) = Dishonest — actionable misrep (Edgington v Fitzmaurice) = Sub-issue 2: whether the misstatement was relied upon by the representee (cause inducement -- but for test; fraud case: a cause is enough) - BUT: itis for the representor to show: if it would be reasonable for a representee to take an opportunity to discover the truth —+ no reliance (Smith v Bush) = BUT: in fraudulent misrep: inducement found even if the representee did not believe in the truth of the misrep (Zurich Insurance Co ple v Hayward) - Sub-issue 3: what is the degree of fault of the representor - 1) fraudulent misrep: (Derry v Peek) - 1, Knowingly 2. Without honest belief in its truth 3. Recklessly, careless or whether it be true or false = —+ consider 1) whether there were reasonable grounds for believing were the means of knowledge in the possession of the person making + 2)negligent misrep: - Failure of duty of reasonable care + special relationship = 3) innocent misrep: - Have reasonable grounds + 4) MO 3(1): (Howard Marine v A Ogden) - Cneed to show: 1) false statement 2) induce her 2) what- For representor to show 1) honestly believed 2) on reasonable grounds of its truth Issue 3: what are the damages recoverable Recission > Reliance damages 4) fraudutent: ~ Sub issue 1: whether C can claim under tort of deceit: - all losses that direct or consequentially flows from it; not limited by remoteness and contributory negligence, even unforeseeable loss can be recoverable = sub issue 2: whether C can claim for rescission :subject to bars to rescission (lower threshold) 2) negligent: - Sub issue 1: whether C can claim under tort of negligence: - Reliance measure: but for test - subject to remoteness test (foreseeable); subject to contributory negligence ~ Sub issue 2: whether C can claim under MO 3(1) ~ ‘Fiction of fraud’: no reduction of damages under common law - Sub issue 3: whether C can claim for rescission and indemnity = Subject to bars to rescission = Ifrescission denied by court— Sub issue 4: whether C can claim under MO s3(2) (damages in lieu of rescission) > award: s3(3) + s3(1)-s3(2) (no double recovery) + 3) innocent: - no damages under commen law - Sub issue 1: whether C can claim under MO s3(2) = See whether C have the right to rescind the contract — if no, no damages under MO s3(2) Bars to rescission 41) Affirmation 2) Lapse of time (not barred to fraudulent, for non-fraudulent: sue within reasonable time of discovering the truth) (Leaf v International Galleries; Salt v Stratsone Specialist Ltd) 3) Third party right 4) Impossibility of mutual rescission: the contract is partially or wholly performed — impossible to return the benefit transferred under the contract 5) inequity : MO s3(2): award damages in lieu of rescission where it would be equitable. Damages recoverable for fraudulent misrep and MO 3(1) 1) Devaluation of property after contract formation: price paid - the market value of the property at the time the purchase was made — representee must mitigate her loss but can claim for falls in the value of the property after contract formation (even unforeseeable) (Smith New Court v Serimgeour Vickers)2) Loss of opportunity (East v Maurer) 3) Damages for non-pecuniary loss - Issue 4: whether the liability of misrep is excluded - 1) fraudulent: cannot exclude/ restrict liability for fraud (S Pearson & Son v Dublin Corp) = 2) non-fraudulent: ‘no reliance clause’ - Sub-issue 1: whether it covers the misrep (contra proferentem) - Sub-issue 2: whether itis regulated by MO (see MO s4 (p.72)) + subject to reasonableness test - Sub-issue 3: whether it satisfies the reasonableness test under MO s4 (see CECO) Mistake - Issue 1: whether the contract is vitiated by mistake ~ Sub issue 1: whether the contract can be avoided on the ground of agreement mistake (mutual mistake/ unilateral mistake) - 1) mutual mistake: contract on the basis of different assumptions, none of which can objectively be said to constitute a shared intention — difficulty in determining what the parties have agreed even with relevant facts (Raffles v Wichelhaus (Peerless) - 2) unilateral mistake as to terms at common law: contract void if party ought to know a mistake was made by the other party but remain silent (Hartog v Colin & Shields) = 3) unilateral mistake about the nature of the document: non est factum (Foster v Mackinnon; Saunder v Anglia Building Society) - 4) unilateral mistake as to identity at commen law: 4 rules - Objectivity test: party cannot accept an offer that she knows was not intended to be made to her (Bolton v Jones) - Written contract: party named in the written agreement (Cundy v Lindsay; ‘Shogun Finance v Hudson) - Face-to-face dealing: intends to deal with the person present (Phillips v Brooks, Ingram v Little; Lewis v Averay) - Non-existence of the identity assumed: exists and identifiable —- void; non-existent or unidentifiable > voidable (King’s Norton v Edridge) - 5) mistake as to quality/ attribute + not void (Smith v Hughes) - 6) unilateral mistake at equity: Chwee Kin Keong v Digilandmall.com —» mistake as to background assumption (putting wrong price) —> test is unconscionability (the non-mistaken party know that mistake - Actual knowledge — void; constructive knowledge + unconscionable conduct voidable - Sub issue 2: whether the contract can be avoided on the ground of common mistake = Subsub issue 1: whether the parties have allocated the risks of mistakes (McRae v Commonwealth Disposals Commission)‘Subsub issue 2: whether C was at fault (by making a very unreasonable mistake or inducing the other party's mistake ‘Subsub issue 3: whether the mistake was fundamental enough to render the performance impossible = Operative common mistake (contract void) - Res extincta (McRae v Commonwealth Disposals Commission; Couturier v Hastie) - Res sua (Cooper v Phibbs) = Mistake as to the essential quality (inconsistency between cases) = Mistake as to the essential background assumption (Bell v Lever Bros) ‘Common mistake at equity (not operative in common law —» seek relief in equity —» grant rescission) (Solle v Butcher; Grist v Bailey) Rejected by CA in Great Peace (no such thing) Frustration: Issue 1: whether the parties have allocated the risk of the supervening event expressly or impliedly 1) express term: force majeure clause (cover the event? See whether itis in the contemplation of the parties when contract was made) (Metropolitan Water Board v Dick Ker) 2) implied: see specific type of transaction Issue 2: whether the frustration was self-induced (Maritime National Fish v Ocean Trawlors; The Super Servant Two) Issue 3: whether the event is foreseeable (Walton Harvey Ltd) Issue 4: whether the frustrating events radically alter the rights and obligations undertaken (Davis Contractors v Fareham UDC) - 1) Legal impossibility (Metropolitan Water Board v Dick Kerr; Cricklewood v Leighton's; Fibrosa Spolka) - 2) Physical impossibility -- destruction of the subject matter (see p.88-92) - 3) Impossibility of purpose ~ common purpose (Krell v Henry; Herne Bay ‘Steamboat v Hutton) Issue 4: what are the remedies recoverable under LARCO ‘Automatically discharged (Hii Muli v Cheong Yue) ‘Common law: sum paid not recoverable (Chandler v Webster); total failure of consideration can (Fibrosa Spolka) LARCO 516(2): ~ sum paid recoverable, sum payable cease to be payable = Incurred expense for the purpose of performance —» recover the whole or any part of the sums that the court considered just + Ceiling: X exceed the incurred expenses Calculation of just expenses — broad discretion approach (Gamerco SA v ICM) LARCO 816(3):Duress Obtained a valuable benefit before the time of discharge + shall be recoverable (BP v Hunt) Step 1: identify the valuable benefit Step 2: assessment of the ‘just sum’ Issue 1: whether the contract was procured by duress Sub-issue 1; whether there is illegitimate pressure - Threat to person (Barton v Armstrong) — must be illegitimate - threat to property (Astley v Reynolds) + must be illegitimate - Economic duress (contract variation: unlawful threat to breach the contract) - Lawful act duress: immoral or unconscionable threat (Alf Vaughan v Royscot Trust plc) Sub-issue 2: whether the illegitimate pressure is a cause of the innocent party entering into the contract Threat to person + threat to property ~> a cause is enough Economic duress: but for test (Huyton v Cremer) ‘Sub-issue 3: whether there is any practicable alternative Threat to person + threat to property + doesn't’ matter Economic duress: formal requirement (Pao On v Lau Yiu Long, see p. 101) Issue 2: whether there is any bar to rescission Issue 3: Damages: restitution influence Issue 1: whether the contract was procured by actual undue influence ‘Sub Issue 1: whether there is influence exerted ‘Sub issue 2: whether the influence is a cause of entering into the contract Issue 1: whether the contract was procured by presumed undue influence 1) legal presumption of undue influence ‘Sub-issue 1: whether there is a transaction calling for explanation : manifest disadvantage/ cannot be reasonably explained by their relationship (The Etridge) 2) evidential presumption of undue influence ‘Sub issue 1: whether there is a relationship of trust and confidence (Lloyds Bank v Bundy; Barclays Bank v O'Brien; Credit Lyonnais v Burch) ‘Sub issue 2: whether there is a transaction calling for explanation ‘Sub Issue 3: whether the presumption can be rebutted: full, free, informed (Inche Noriah v Shaik Allie Bin Omar) Issue 2: whether there is any bar to rescissionNon-commercial guarantees = Issue 1: whether the guarantor can prove a vitiating factor against primary debtor + Prove undue influence, misrepresentation, slow to find in husband-wife cases Issue 2: whether lender know that the guarantee is non-commercial Issue 3: whether lender know that the guarantee is for the primary debtor's benefit and not the guarantors’ Issue 4: whether the lender has taken reasonable steps Issue 5: whether there is any bar to rescission Termination - Issue 1: whether __ committed repudiatory breach - Sub issue 1: whether ___ breached the contract - Exact and precise performance (Re Moore & Landauer) - Anticipatory breach: renunciation (Hochster v De la Tour) + impossibility (Universal Cargo Carriers Corp v Citati; Chao Keh Lung v Don Xia) - Sub issue 2: whether the breach is sufficiently serious to render termination = Go through the table on p.123 (subsub issue 1-4) = _ Issue 2: what are the remedies available for = Elect termination or affirmation + Sub issue 1: whether ___lose the right to terminate = Sub issue 2: whether __ lose the right to affirm = White & Carter v McGregor: need for the CB's cooperation + legitimate interest = Ocean Marine Navigation Ltd v Koch Carbon Inc. = Sub issue 3: what are the damages available Damages: (accept the repudiation) + Issue 1: what are the damages recoverable - Contract price or expectation loss or reliance loss - Restitution damages if total failure of consideration = Quantum meruit or quantum valebat for reasonable value of goods or services supplied but not yet paid (Planche v Colburn) - Expectation damages: put the claimant in a position as if the contract being duly performed (Robinson v Harman) + 3different approach ~ diminution of value (market value - actually given) = Cost of cure (cost of buying substitute performance, undoing defective performance) = Subject to Ruxiey v Forsyth test : C's purpose is economic? + C intended to cure? + the proportionality? = Loss of amenity: loss of satisfaction/ happiness~ Reliance loss: only if expectation is too speculative and not bad bargain = Nominal damages: no lossi! speculative + non-compensable loss// bad bargain +reliance loss) - Sub- issue 1: whether the damages will be reduced by limitations = remoteness : foreseeabilily (Hadley v Baxendale); assumption of responsibility (The Achilleas) - Mitigation: take positive action to minimise the loss + should not incur unreasonable expenses (The Golden Victory) C may need to accept contract variation from D - Contributory negligence (LARCO s 21) (Vesta v Butcher) - _ Intervening cause: nominal damages if no loss was caused by the D’s breach (Levicom v Linklaters); unreasonable acts of the C (Lambert v Lewis; Quinn v Burch) - _ Non-pecuniary loss: Farley v Skinner: contract for enjoyment (go through the requirement on p.147) or physical inconvenience and discomfort Specific Performance = Issue 1: whether specific performance barred - Sub-issue 1: whether the damages are adequate - Uniqueness: physically unique (Falcke v Gray) /! deeming interests in land to be unique /Icommercially unique : difficulty in obtaining substitute (Sky Petroleum v VIP Petroleum; Beswick v Beswick) = Sub-issue 2: whether the claimant comes with clean hands: induced the contract by unfair means (Walters v Morgan) - Subrissue 3: whether itis a personal service contract (De Francesco v Barnum) —> allow change of mind - Sub-issue 4: whether the C has a legitimate interest to grant SP (White & Charter) - Sub-issue 5: whether constant supervision from the court is needed (Cooperative Insurance v Argyll Store) = Sub-issue 6: whether it would cause hardship to the defendant (Patel v Ali) Injunction - Issue 1: whether damages is adequate = Mandatory injunction: compel positive action, generally the court not grant (Wrotham Park; Wakeham Wood) = Prohibitory injunction: prevent D from doing what she has negatively undertaken — less restrictive = Sub issue 2: whether constant supervision by the court is needed - Sub issue 3: whether granting of injunction will cause hardship to the defendant and infringe his personal libertytest of practicability: if the D can maintain his skills and talent through a realistic alternative, it will not cause hardship (Beacon College v Yiu Man Hau Alfre less remunerative/ earning less is still okay (Lumley v Wagner) Cause long-period idle and unemployed — injunction denied (Page One Records v Britton; Warren v Mendy)