Contract Law (Longman Law Series)

Description

Fully updated with the latest legal developments, Contract Law is your essential guide to the life of a contract. It covers all stages of the process, from negotiation and formation, through its possible modification to the ending of a contract including a thorough examination of available remedies. Offering a modern, engaging account of all aspects of contract law, this new edition will give you a clear understanding of the legal principles which underpin the contractual process. Cover Contents Preface Table of cases Table of statutes Table of statutory instruments Table of treaties Table of EU directives 1 Introduction Why another book on contract law? The history of contract law The basis of contract The law of contract or contracts The law of obligations The real world Human rights and contract law Europe . . . . . . and Beyond Additional reading Part I: The negotiation stage 2 Negotiating the contract Introduction Estoppel by convention The objective test of agreement and the 'snapping up'of mistaken offers Mistake of identity Misrepresentation General principles Representations of fact Silence as misrepresentation Change of circumstances Half-truths Inducement The actions for misrepresentation Rescission The requirement of communication to the representor The bars to rescission The intervention of third-party rights Restitution is impossible Affirmation Lapse of time Misrepresentation Act 1967, s 2(2) Indemnity The recovery of damages The tort of deceit Misrepresentation Act, s 2(1) The tort of negligent misrepresentation Misrepresentation in overview Proprietary estoppel Restitution: failed contract cases Advantages and disadvantages of a restitutionary analysis Collateral contracts A duty to disclose? Disclosure of terms Contracts uberrimae fidei Undue influence Fiduciary relationships Inequality of bargaining power Statutory disclosure requirements Quasi exceptions: conduct, half-truths and With v O'Flanagan Other encouragements to disclosure: Sale of Goods Act 1979 A wider duty to disclose A duty to negotiate in good faith What is it? Do we have it? Do we need it? Conclusion Additional reading Part II: The birth of the contract A. Formation of a contract: the positive requirements 3 Agreement: offer and acceptance Introduction Whose agreement? Offers and invitations to treat Two cautions Advertisements Displays of goods Websites Auctions Tenders Standing offers Tickets and machines 'Shrink wrap' and 'click wrap' agreements The termination of an offer Revocation – bilateral contracts Revocation – unilateral contracts Rejection Lapse of time Death of offeror and offeree Acceptance Acceptance in bilateral contracts The postal rule of acceptance The rationale of the postal rule When does the postal rule apply? The consequences of the postal rule Silence as acceptance Acceptance in unilateral contracts Conclusion Additional reading 4 The enforceability of agreements: consideration and its alternatives The traditional definition Consideration and gift Consideration and request Consideration need not be adequate Past consideration Moral and economic consideration Compromise agreements Pre-existing duties The pre-existing duty arises from a contract with a third party The pre-existing duty arises from the law generally The alternatives to consideration Deeds Estoppel Additional reading 5 Form, intention and certainty Form Cautionary formal requirements Informational formal requirements Transferable formal requirements Intention Domestic and social arrangements Business agreements between strangers Certainty Vagueness Incompleteness Additional reading B. Formation: negative factors 6 Illegality in formation Introduction Policy objectives Statutory illegality Illegality at common law Contracts to commit a crime or tort Contracts promoting sexual immorality Contracts prejudicial to the administration of justice Contracts injurious to the institution of marriage or prejudicial to family life Contracts liable to affect adversely the state's relations with other states Contracts inconsistent with good government Contracts in restraint of trade Employment contracts Contracts for the sale of a business Other anti-competitive practices Statutory control of anti-competitive practices Gambling contracts The consequences of illegality Enforcement of the contract The recovery of money and property Withdrawal from the illegal enterprise Where the parties are not equally guilty (in pari delicto) Recovery without reliance upon the illegal contract Transferor can recover because the transferee did not thereby obtain any interest Transferor can recover because the transferee's interest in the property was subsequently terminated Transferee may recover because the illegal contract was effective to transfer property to him The non-reliance principle and the law of trusts Critique of the non-reliance exception Severance Reform of the law Additional reading 7 Non-agreement mistakes Common mistake as to the existence of the subject matter of the contract Common mistake as to quality Mistake as to ownership of property Conclusion Additional reading C. Personnel 8 Capacity Minors Contracts for necessaries Beneficial employment contracts Ratification Voidable contracts Restitution by a minor Mental incapacity Companies Conclusion 9 Third parties Introduction The first rule: strangers cannot enforce contracts Exceptions to non-enforceability Contracts (Rights of Third Parties) Act 1999 Further limits upon the new third-party right Other statutory exceptions The trusts exception Agency Collateral contracts Assignment The law of tort Action by the promisee Specific performance Stay of action Damages The second rule: contracts cannot impose obligations upon strangers Land law The tort of interference with contractual rights Bailment Additional reading Part III: The life of the contract 10 The content of the contract: express and implied terms Express terms Term or representation? Verification Importance Time The relative skill and knowledge of the parties Parol evidence rule Collateral contract Implied terms Statute Implied term as to title Implied term as to description Satisfactory quality Fitness for a particular purpose Sale by sample Other legislation Custom The common law Implication in fact Implication in law Interpretation Additional reading 11 The content of the contract: exclusion clauses Exemption clauses Incorporation Construction The Unfair Contract Terms Act 1977 Reform, scope, concepts and definitions Liability for negligence Contractual liability Statutory implied terms The Misrepresentation Act 1967, s 3 The Unfair Terms in Consumer Contracts Regulations 1999 Overview Additional reading 12 The modification of contracts Introduction Contractual flexibility Opportunism Where a rule of non-enforcement works Where a rule of non-enforcement fails The pre-existing duty doctrine Rescission and new contract A finding of new consideration Duress Introduction The present approach The legitimacy of the threat A threat to refuse future business A threat to breach a pre-existing contract A threat to commit a tort The requirement of ‘compulsion’ Vitiation of consent Protest The existence of an adequate alternative The law provides a remedy for the damage which would result if the threat were carried out The law provides a remedy for the damage which would result if the threat were carried out which in all the circumstances of the case is an adequate one Either the law provides a remedy for the damage which would result if the threat were carried out which in all the circumstances is an adequate one, or there exists an extra-legal alternative which in all the circumstances of the case is an adequate one Independent advice Subsequent affirmation The ability to pass on costs The non-enforcement rule Waiver Introduction Waiver as forbearance At common law In equity Promissory estoppel Introduction Unambiguous representation Relliance Promisee must have acted equitably Is promissory estoppel suspensory or extinctive? The offensive limits of promissory estoppel Introduction (a) Estoppel can be only used as a defence (b) Estoppel can be used by a party seeking to enforce a claim based upon a recognised cause of action to defeat the defence or counter-claim of the other party (c) Estoppel can be used by a party seeking to enforce a claim to prove one element of a recognised cause of action (d) Etoppel can be used by a party seeking to enforce a claim to prove all the elements of a recognised cause of action (e) Estoppel has created a new cause of action The estoppel spectrum operationalised Should promissory estoppel create a new cause of action? Frustration Introduction Frustration and the allocation of risk Increases in performance costs Imposed modifications Mitigation Conclusion Additional reading 13 Performance Withholding performance Incomplete performance Illegality in performance Part IV: The death of the contract 14 Frustration Introduction The juristic basis of frustration The implied term theory Total failure of consideration The just and reasonable solution Frustration of the adventure The ‘radical difference’ approach The main applications Impossibility Illegality Frustration of objective The effects of frustration Additional reading 15 Termination for breach Anticipatory breach Conditions and warranties By statute By the parties’ own classification The court’s classification Innominate terms Additional reading Part V: The aftermath 16 Literal performance Introduction Specific performance Should specific performance be more widely available? What the parties want History Restrictions Damages are an adequate remedy Land Goods Building contracts Contracts to carry on a business Constant supervision Contracts of personal service Severe hardship Conduct and inaction of the claimant Absence of mutuality Expectation longstop Injunction Action in debt Additional reading 17 Damages for breach of contract Introduction The general compensatory aim The three types of award Loss, proof and opportunity The net loss principle The minimum performance rule Extra compensatory damages Exemplary and aggravated damages The requirement of a property interest Restitution measure damages: enrichment by wrongdoing The rule in Cory v Thames Ironwoks Co Unliquidated damages The time of assessment The expectation measure: pecuniary loss Cost of cure and diminution in value Non-delivery and the market-price rule A seller of goods may sue a buyer who in breach of contract refuses to take delivery The expectation measure: non-pecuniary loss Contracts for the provision of pleasure or enjoyment Contracts to provide peace of mind or freedom from distress Failure to enhance reputation Loss of amenity The reliance measure: pecuniary loss Post-contractual reliance Pre-contractual reliance The reliance measure: non pecuniary loss Physical inconvenience Physical inconvenience causing mental distress Damage to existing reputation The restitution measure Recovery in respect of non-monetary benefits The relationship between the measures of damage Combining claims and overlap Escaping from bad bargains – expectation and reliance Escaping from bad bargains – expectation and restitution Limits upon recovery Causation Contributory negligence Remoteness Recovery for ordinary losses Recovery for unusual losses Mitigation Liquidated damages and penalties Policy Lord Dunedin’s guidelines The basic test There must be a breach Not only payments The disproportion principle What loss? The wording of the clause Sum payable on one of several events The effect of liquidated damages clauses and penalties Liquidated damages clause Penalty clauses Actual loss exceeds sum stipulated Liquidated damages set at less than anticipated loss Evasion of the jurisdiction Sum made payable on an event other than breach of contract by the payer Creation of a present debt and an acceleration clause Termination clause in Lombard North Central v Butterworth The forfeiture of deposits and advance payments Deposits The Workers Trust case Law of Property Act 1925, s 49(2) Consumer Credit Act 1974 Unfair Terms in Consumer Contract Regulations 1999 Advance payments Stockloser v Johnson The Dies principle Additional reading Index A B C D E F G H I L M N O P Q R S T U V W