Examiners’ report 2012

Examiners’ report 2012

LA1040 Elements of the law of contract – Zone A

Introduction
This document sets out the Chief Examiner’s report for the examination paper in
Elements of the Law of Contract – Zone A. It begins with general remarks pertaining
to the examination scripts as a whole before considering each examination question
in turn.

Many candidates answered the questions well. At times, however, some candidates
struggled in the attempt to answer the problem set. Three common difficulties were
exhibited. One was a very fundamental one: an inability to recognise that certain
areas of law were involved in resolving the hypothetical problem. Candidates might,
for example, fail to recognise that when asked to advise party C given a contract
between A and B (for the possible benefit of C) that the primary issues involved
were privity of contract and the rights of third parties. A second difficulty was
presented by those candidates who did not carefully consider the facts presented in
a problem question. The resulting legal reasoning was often not directed at the
given issues. In some instances, a general discussion of a particular area of law
was presented, in absence of any attempt to apply this law towards the resolution of
the problem given. A third, somewhat less fundamental difficulty, was an inability to
recognise the particular and specific issues involved within a broad area of law
which the candidate had recognised as relevant. At times, this problem seemed to
arise because candidates appeared to be covering legal issues which had formed
examination questions set in previous years.

Some candidates, in other words, appeared to be reproducing answers to past

examination questions. It must be emphasised that a purpose of the Examiners’
report is to give an indication of a method by which particular questions can be
answered and some indication of the law necessary to answer these questions. The
Examiners’ report is not intended to form a base of specific knowledge which is to
be recited as the answers to future examination questions.
It is extremely important that candidates apply the law to the issues presented in a
problem. Candidates should consider the principles developed within the relevant
cases and the reasons behind these particular principles. These must then be
applied to the problem to resolve it. For many candidates, however, their answer to
a problem question resembled a ‘shopping list’ of cases dutifully recorded in the
examination booklet. The reason for this is likely twofold: first, it is often hard for
intermediate candidates to discern the relevant from the irrelevant and caution
encourages a complete list of cases to ensure that none are omitted; secondly, it is
tempting to produce a lengthy answer in the hope that the Examiner will be
impressed by the breadth of knowledge acquired by the candidate. A successful
answer identifies the issues and applies the relevant law to them. Such an answer
displays not only knowledge, but also understanding of the subject being examined.
The recitation and discussion of cases which are irrelevant to the question serve to
highlight a candidate’s uncertainty as to which issues are involved in the question.
In other instances, some answers appeared chaotic, as if the candidate had hurried
into an issue without full consideration of the question as a whole. Candidates who
prepare a careful plan of their answer before writing it in full will find that the time

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spent in making such a plan is repaid by the clarity of the final answer. Among other
things, it allows candidates to see the interaction of issues before they have
committed themselves to one course or another. It should also prevent candidates
from omitting points they had intended to discuss. Many candidates struggled to
answer essay questions thoroughly. Their attempts were often, and unfortunately,
confined to the recitation of everything they knew about a particular subject. In so
doing, such candidates often presented a great deal of material; this presentation
was marred by an apparent inability to discern the relevant from the irrelevant and a
lack of analysis as to the underlying nature of the question. Candidates must
consider whether or not they are addressing their answer to the question as asked.
A part of this answer will, necessarily, involve legal analysis. In other instances,
candidates were unable to answer the question asked in an essay question. They
chose, instead, to adapt the question to a topic that they did know something about.
Such an attempt is not, however, an answer to the question asked. It also leaves
the Examiners with the impression that the candidates are unable to answer four
questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the balance of the paper.

It goes without saying that it is difficult to succeed where all of a candidate’s efforts
are concentrated on two or three answers when the examination paper requires
four questions to be answered. A number of candidates did not appear to have
sufficient knowledge of contract law to attempt four questions. Lastly, the
Examiners for Elements of the Law of Contract wish to emphasise the importance
of writing the answers clearly. It is difficult, and sometimes impossible, to assess the
illegible.

Specific comments on questions

Question 1

Norman, a model, has been losing his hair, a matter which concerns him
greatly. He reads an advertisement in a men’s magazine which states:

‘Thinning hair? Receding hair? Worry no more for an easy lotion is

now available: Dynamic Hair Growth – a new lotion made by the
Dynamic Hair Growth Company. The use of the Dynamic Hair Growth
lotion will not only halt hair loss, it will reverse this process and
restore any hair already lost. Simply use Dynamic Hair Growth three
times daily, in accordance with the instructions, for two months and
see the results. A full head of hair or we will provide you with £1,000.’

The advertisement also states, in small print below the bold statement, ‘see
our website for further information’. Norman does not check the website
which provides a long list of medical conditions which will prevent the
Dynamic lotion from properly working.

Norman purchases the Dynamic Hair Growth lotion from Easy Chemists,
where the sales assistant informs him that the lotion has done wonders for
her husband’s hair. Norman uses the lotion in accordance with the
instructions for two months. At the end of the two months, Norman is

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completely bald. When he contacts the Dynamic Hair Growth Company, their
doctor examines him. Based on this examination, Dynamic inform him that
the baldness is due to a rare medical condition. Norman, now no longer able
to work as a model, becomes despondent.

Advise Norman.

To what extent, if any, would your advice differ if the Dynamic Hair Growth
had been a gift to Norman from his girlfriend, Olive?

General remarks
This problem question asked candidates to determine whether or not Norman had
formed a contract with Dynamic. To answer this question, candidates needed to
consider those cases concerned with the offer of a unilateral contract. These cases
include Carlill v Carbolic Smoke Ball Co (1893), Bowerman v ABTA (1995) and
Soulsbury v Soulsbury (2007). If Norman does have a contract with Dynamic, is he
able to claim damages beyond the reward offered of £1,000? To resolve this
specific issue, candidates needed to consider the nature of the terms of Dynamic’s
offer. In particular, what effect are those matters listed on Dynamic’s website and of
Norman’s failure to consult the website? Is Norman’s rare medical condition one of
those which are listed?
In addition to any possible contract with Dynamic, candidates needed to consider
any potential contract with Easy Chemist. It seems likely that a contract was formed
with Easy Chemist; would such a contract have allowed Norman to claim damages
for the losses which arose? A good attempt at the answer would have differentiated
the nature of any contract with Dynamic from that with Easy Chemist. In addition,
the facts given appear to indicate that Norman’s baldness is due to a rare medical
condition and not use of the hair lotion.
This question concluded with a variant to the principal issues presented above
when candidates were asked to consider whether their advice would differ if the hair
lotion had been a gift to Norman from his girlfriend Olive. In such a situation it
seems unlikely that Norman would be aware of Dynamic’s offer of a reward. If he is
not aware of the offer, it is probably the case that he cannot accept the offer
although the law in relation to such an issue is not certain. Candidates could have
considered the nature of the decisions in cases such as Gibbons v Proctor (1891)
and R v Clarke (1927). If Norman is aware of the offer, has he met the conditions of
the offer if Olive purchased the hair lotion? Has Norman provided consideration
such that a contract has been formed?
A good answer to this question would…
Begin by considering the general nature of the area of law concerned – contractual
formation – and then would proceed to identify the particular issues involved in
resolving the question of the contract or contracts formed and the particular terms of
these contracts.
A good answer would also set out the legal principles and reasoning in the relevant
cases and apply these with clarity to the issues presented in these problems.
Poor answers to this question…
Varied from those instances where candidates were unable to establish that the
question involved issues of contractual formation. In some cases, candidates were
preoccupied with addressing matters that were not central to the resolution of the
problem. An example of this occurred with considerations of misrepresentation – on
the basis that the Easy Chemist sales assistant had informed Norman that the lotion

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had done wonders for her husband’s hair. A further example occurred in those
attempts to answer the variant to the question with considerations based solely on
privity of contract. Such lengthy considerations were misplaced because there is
nothing to indicate that such a statement was a misrepresentation, let alone an
actionable misrepresentation.

Student extracts

Extract 1
The following is an extract from the introduction of one candidate’s attempt to
answer this question.

‘OFFER: An expression of willingness to be bound on certain terms.

Acceptance: An unequivocal assent to all terms.

Generally Adverts are considered as ITT’s (Partridge v Crittenden) and the offer will
be made by responding to the advert, by communicating with the advertiser.

But conditions are different for that of a unilateral contract. Unilateral contracts are
often referred to as reward contracts. Where the offeror makes an offer to the world
at large usually via an advert. A promise in return for an act. The offeree does not
need to communicate acceptance directly to the offeror. Acceptance is usually
made by carrying out an act or term listed in the advert. This will normally initiate a
binding contract. Revocation of this kind of offer has to be made in exactly the same
way as the offer to the world at large.’

There are a number of weaknesses presented in this extract in addition to the

obvious grammatical errors and infelicities of style. It is far preferable to commence
a discussion with the relevance of the statements to be made rather than plunging
into the statements as to the nature of an offer and an acceptance. It is also the
case that the statement as to the nature of an offer is not complete. Neither
proposition is supported with reference to the relevant legal precedents. The
answer then jumps, without further ado, to consider ‘Adverts’, stating that they are
‘ITT’s’. It would be preferable if the nature of an offer were considered more fully,
with reference to the relevant cases before proceeding to consider whether or not
an offer can be made in an advertisement. It is also advisable not to use acronyms
or abbreviations (here ‘ITT’s’) without defining these or, at a minimum, indicating
what this is an abbreviation for. The result is that this candidate has commenced
their attempt to answer the question in a way which is confusing to read and does
not indicate an understanding of the question which has been asked by the
Examiners.

Extract 2
Another candidate began their attempt to answer the same question with the
following statements.

‘Norman will want to be advised if he is able to claim the £1,000 from Dynamic Hair
Growth Company and, if possibly, he is entitled to any further compensation as a
result of his hair loss.

The ‘offer’

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An offer is an expression of willingness to contract on certain terms with the

intention to be bound upon acceptance – (Treitel). We must first look to see whether
the advertisement that Norman (‘N’) saw in the men’s magazine was indeed an
offer.

Historically, adverts in magazines are seen as invitations to treat rather than offers
(Partridge v Crittenden) but there are exceptions to this rule when there is a
unilateral offer. A unilateral offer is a promise in return for an act. The facts of the
scenario strike a resemblance to that of the famous case of Carlill v Carbolic Smoke
Ball Company where the court held that this was a unilateral offer. In this case an
advertisement was placed offering a monetary reward should one purchase a
‘Carbolic Smoke Ball’, use it correctly, and still contract influenza. The claimant was
entitled to the reward as the offer was deemed as ‘an offer to the world at large’
capable of acceptance by conduct (i.e. purchasing and using the carbolic smoke
ball). Relating the facts of this case to the present situation will no doubt suggest
that the magazine advertisement was a unilateral offer and capable of acceptance.’

In comparing these two attempts to answer the question, it can be seen that this
second attempt has certain strengths over the first attempt. It clearly introduces the
general point of the answer (‘Norman will want to be advised . . .’.). The point could
be stated more directly that Norman’s entitlement to damages lies in establishing
that a contract exists with Dynamic and then proceeding to consider:
(a) the necessity of an offer to form a contract; and

(b) whether or not an offer capable of acceptance has been made in this
case.

The second attempt to answer the question sets out the relevant legal precedents in
attempting to resolve the issues presented. The second attempt could, however, be
stronger. It might, for example, have considered what was necessary to constitute
an offer before considering in what circumstances an advertisement could be an
offer.

Question 2

Abby operates a taxi company and has entered into lucrative contracts with
two law firms, City Slackers LLP and Fat Cats LLP. The following events
occur:

a) Her contract with City Slackers involves the supply of ten taxis every
night to take their employees and clients home from the firm’s offices.
After a month, Abby realises that the rise in petrol prices has made it
impossible for her to supply the taxis without operating at a loss. She
contacts City Slackers and informs them that she will not be able to
supply the full quota of ten taxis the following night. City Slackers are
hoping to finalise a very profitable deal with important clients that
week and have no time to find an alternative taxi firm. In addition, they
think that Abby’s professional taxi service will give a good impression
and may help to seal the deal. They therefore agree to pay Abby an
extra £500 if she can continue to provide the taxis for the rest of the
week. Abby agrees but when she invoices City Slackers they refuse to
pay her the additional money.

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b) Abby has an agreement with Fat Cats to supply five taxis every
morning. Recently, however, she has had a number of staff problems
and is unable to provide enough drivers for the five taxis. She
contacts Fat Cats and asks whether it would be possible to provide
only three taxis for two months whilst she expands her business
through a new advertising and recruitment drive. Fat Cats agree. Abby
spends a huge amount of money on advertising, buys new cars and
employs new staff. However, after the two months, Fat Cats now seek
compensation for the two taxis that were not provided.

c) One of Abby’s drivers picks up the managing director of Fat Cats,

Sophie, every morning. Sophie tells the driver that she loves being
driven the longer, scenic route to work since it relaxes her and
improves her performance during the working day. The driver begins
to take Sophie via the scenic route. After a month, Sophie tells the
driver that the journey is greatly benefitting her work and that Fat Cats
will pay for the extra petrol. That day, Abby invoices Fat Cats for the
last month’s services, including an additional £100 for the extended
route. Fat Cats refuse to pay the additional £100.

Advise Abby.

General remarks
This question was attempted by a large number of candidates. The problem
presents three distinct issues concerned with consideration, promissory estoppel
and the relationship between these two areas of law.

Part (a) required candidates to discuss the law applicable to the question of whether
or not the performance of a pre-existing contractual obligation (owed to the same
party and not to another party) can be good consideration. If it is good
consideration, Abby should be able to enforce the promise to pay the additional
£500 City Slackers agreed to pay to Abby under the renegotiated agreement. To
determine whether or not there is good consideration present in this renegotiated
agreement depends upon the application of Williams v Roffey Bros (1989).
Candidates needed to consider whether or not the circumstances necessary for the
application of this precedent; for example, an absence of duress, exist in these
circumstances. A good answer considered the criteria necessary to establish a
practical benefit as established in Williams v Roffey Bros (1989) and applied these
criteria to the facts given in the problem. It could be argued that Abby should have
been more aware of the rising petrol prices which would render contractual
obligations impossible to perform profitably. A very good answer would consider the
strength of Williams v Roffey Bros (1989) as a precedent in light of later decisions
such as Re Selectmove (1993).

Poor attempts to answer this question consisted of formulaic discussions of the

necessity for consideration without exploring the precise issues involved in the
problem. Many candidates did not display an understanding of the circumstances in
which Williams v Roffey Bros could be applied nor the criteria necessary for its
application.

Part (b) of the question asks candidates to consider promissory estoppel and its
relationship to consideration. Abby’s reliance on the promise, by spending money
on advertisement and recruitment, is likely to assist her claim that a promissory
estoppel has been made out. Candidates needed to consider and apply the criteria

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necessary to establish a promissory estoppel. If, on these criteria, a promissory

estoppel has been made out, can Fat Cats recover damages for the non-
performance of the original agreement? While many candidates considered the
nature of promissory estoppel, few considered whether such an estoppel would
prevent the recovery of damages for the non-performance of the original
agreement.

Finally, part (c) required candidates to consider whether or not Sophie’s promise to
pay extra money is contractually enforceable. It would appear that the promise is
not binding since the apparent consideration is past consideration. It is unlikely that
the exceptions established by Pao On v Lau Yiu Long (1979) will apply in this
scenario. A good attempt to answer the question would consider the decision in Pao
On v Lau Yiu Long.

Weak attempts to answer this question were made by those candidates who did not
realise that the problem was concerned with the rule against past consideration.

Question 3

‘Although the Misrepresentation Act 1967 was a much-needed piece of

legislation it was extremely poorly drafted, leaving much for the courts to
develop. On the whole, however, the courts have done a good job in their
interpretation of the legislation, particularly where the “fiction of fraud” is
concerned.’

Discuss.

General remarks
A significant number of candidates attempted to answer this question. Candidates
were required to write an essay considering the Misrepresentation Act 1967 and
how the legislation has been interpreted and applied by the courts since that time. A
good answer to the question might also include an examination of the 1967 Act’s
relationship with the common law torts of negligent misstatement and deceit and the
relief available for an equitable misrepresentation.

A number of topics could be discussed in an essay considering the 1967 Act. One
such topic could be the ‘fiction of fraud’ and how this has been interpreted in
decisions such as Royscott v Rogerson (1991). An essay could also discuss how
difficult courts have made it for a representor to prove his honesty and
reasonableness under s.2 of the Act in making the statement as a result of the
decision in Howard Marine & Dredging Ltd v Ogden (1977). Another interesting
area of examination arises from the interpretation of s.2(2) of the Act. The Act
provides little guidance as to the assessment of damages to be made under this
sub-section. In addition, the authorities are divided as to whether or not the sub-
section is applicable when the claimant has lost the right to rescind the contract (for
example, Zanzibar v British Aerospace Ltd (2000), Thomas Witter Ltd v TPB
Industries Ltd (1996)). A very good attempt at the question would explore a variety
of these topics, providing a good synthesis of the judicial interpretations of the Act
and an analysis of the difficulties presented by these interpretations.

Few candidates who attempted to answer this question addressed their answer to
the question as set. An unfortunately large number of attempts discussed matters
either entirely irrelevant to the question set (for example, those requirements

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necessary to establish a misrepresentation) or produced discussions which were

largely irrelevant (for example, a catalogue of different types of misrepresentation).
The question is not answered by producing a general discussion on the nature of
different forms of misrepresentation and the remedies generally available.

Question 4

Walter and Metallica Ltd contract to provide that Walter will sell to Metallica
an island rich in coal. The agreement was entered into on April 13 and the
island was to be conveyed to Metallica on May 1. The purchase price was
£5,000,000. On April 1 Parliament passed the (fictitious) Prevention of Strip
Mining Act. The Act came into force on April 10 and its effect was to prohibit
all strip mining on the island.

Neither party was aware of the legislation at the time of the contract. Metallica
paid to Walter a deposit of £500,000. Metallica subsequently discovered the
planning restrictions before May 1. Metallica refused to complete the contract
of sale. Walter sued for specific performance of the contract and Metallica
counter-claimed for the return of its deposit. The island, so restricted, is
worth £200,000.

Advice Metallica.

General remarks
A large number of candidates attempted to answer this question. The central issue
presented is that of contractual mistake.

A good answer to this question would…

Need to consider whether there was a sufficiently fundamental mistake to vitiate the
apparent contract of sale? The relevant mistake is as to a quality of the subject
matter of the contract. Candidates needed to consider and apply the leading cases
concerned with such a mistake. Relevant cases include Bell v Lever Bros (1931),
Solle v Butcher (1949), and Great Peace Shipping Ltd v Tsavliris Salvage
(International) Ltd (2002). A number of particular issues needed to be addressed.
Is the contract void for mistake? Is it possible for it to be voidable for mistake? A
good attempt to answer the question would address the ambiguities left in this area
of law following the Court of Appeal’s decision in Great Peace Shipping v Tsavliris
Salvage (International) Ltd. Candidates could also have considered, if the contract
is subsisting, whether or not the purchaser could resist an action for specific
performance.

Poor answers to this question…

Occurred where candidates did not properly consider the issues arising from the
facts presented. Although fictitious legislation is present in the facts given, it does
not give rise to issues of illegality. Nor is the question concerned with frustration
because there is no supervening event arising after contractual formation. Attempts
to answer the question on either basis revealed a lack of understanding of contract
law.

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Question 5

Pat is the owner of an old and somewhat decrepit house in need of attention.
Her family decide that, as a birthday gift to her, they will have the house
renovated and refurbished. Her husband, Quentin, engages Sparke Ltd, a firm
of electricians, to rewire the house and install recessed lighting throughout.
The work is to be completed by the end of February. Pat’s mother, Ruby,
arranges to have Floode Ltd install a new set of bathroom fixtures in the
upstairs bathroom. This work is also to be completed by the end of February.
After Ruby has placed her order, she and Floode agree that Floode will only
be accountable to her. Not to be outdone in the project, Terence, Pat’s father,
visits the Busted shop and arranges to have a complete home entertainment
system delivered to Pat’s home.

Sparke work slowly and erratically and at the end of April have still not
completed their work. Floode do not supply the bathroom fixtures ordered
and what they do install is so poorly done that the entire work will need to be
replaced. Pat and Ruby argue over this and Ruby insists that everything is
fine and that there is nothing she will do about this. The home entertainment
system from Busted is not as described and is unable to function
continuously for more than half an hour. Pat and Quentin have had to live in a
hotel for the past two months and found it difficult to function normally given
the stress of the situation.

Advise Pat.

General remarks
This question was attempted by a reasonable number of candidates. The question
is primarily concerned with privity of contract and the rights of third parties. Pat
owns a house; Quentin, Ruby and Terence all enter into contracts in relation to this
property. Pat is not a party to these other contracts; privity of contract should bar
her from enforcing these contracts. Candidates should have considered and applied
cases such as Dunlop Pneumatic Tyre v Selfridge & Co Ltd (1915) and Beswick v
Beswick (1967) to establish such a proposition.

The issue to be considered, however, is whether Patricia is able to enforce all or

any of these contracts as a third party, either under the Contracts (Rights of Third
Parties) Act 1999 or under the various exceptions available at common law?
Candidates should consider and apply the relevant provisions of the Act.

A good answer to this question would…

Examine the cases interpreting the provisions of the Act. A particular issue which
arose in relation to Ruby is her attempt to vary the contract after it has been entered
into; the Act, in general terms, prohibits such an attempt. Would the attempt have
been effective here? Candidates could also have considered the relationship of the
Act to the common law and consider whether or not, at common law, Patricia might
have enforceable rights under some or all of these contracts.

A very good attempt to answer the question would note that aspects of the problem
are close to that outlined in the obiter dicta of Lord Griffiths in the leading case of
Linden Gardens v Lenesta Sludge (1993).

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A minor issue at the end of the problem is, assuming that Patricia does have a right
to enforce some or all of these contracts, what remedy is available to her? Can she,
for example, recover damages for mental distress? A good attempt to answer the
question would explore such a possibility.

Poor answers to this question…

Failed to appreciate that privity of contract was an issue presented by the facts
given. The result was to produce an answer concerned with breach of contract and
damages without any consideration that Pat’s central problem was whether or not
she could, as third party, enforce the various contracts. Some poor attempts to
answer this question recognised that privity was a problem but did not consider any
means by which Pat, as a third party, could seek to enforce the various contracts.

Question 6

Hubert decides to improve his foreign language skills. He telephones

SpeakRite, an online foreign language service, and enquires about their
Polish language courses for beginners. Patek, one of SpeakRite’s
salespersons, explains the content of the Polish language package to Hubert.
Every month a password will be emailed to Hubert which will enable him to
download the full content of that month’s lessons. In addition, SpeakRite
undertake to provide Hubert with an hourly conversation class by telephone
with one of the company’s native Polish teachers. The package costs £100
per month.

Hubert is impressed and decides to subscribe to the monthly package. He

receives a contract by email which directs him to a website containing
SpeakRite’s terms and conditions. When Hubert accesses the webpages and
tries to read them, however, he is unable to understand anything as it is all
written in Polish. He nevertheless sends SpeakRite the initial £100 to
commence the course.

All goes well for the first two months. However, certain problems then arise.
Hubert discovers that the native Polish teacher has resigned and there will no
longer be any conversation classes available. In addition, when Hubert enters
his password a virus within SpeakRite’s webpages deletes all of Hubert’s files
on his computer. He immediately telephones SpeakRite who send one of their
engineers, Marek, to investigate. Unfortunately, Marek cannot rescue the files.
On leaving Hubert’s home, Marek reverses his van over Hubert’s foot causing
him serious injury.

On complaining to SpeakRite, Hubert is given an English copy of the

company’s terms and conditions:

i) SpeakRite reserve the right to alter the content of their service without
prior notification.

ii) SpeakRite accept no responsibility whatsoever for damage to

property, howsoever caused.

iii) SpeakRite accept no liability for personal injury caused to their clients
by SpeakRite or their employees.

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Advise Hubert.

General remarks
This question was attempted by a large number of candidates. The question is
concerned with the incorporation of terms into a contract, whether the terms are
applicable to the circumstances that have arisen and the statutory regulation of the
terms. A good attempt to answer the question would have considered these various
issues in turn.

The first issue presented is how the terms provided are incorporated into the
contract. If they are incorporated, it is probably by reasonable notice. The problem
is whether the fact that the terms are written in Polish prevents their incorporation. A
good attempt to answer the question would notice that it is relevant that the terms
regulate contracts for those learning the Polish language and therefore, by
definition, not able to understand terms written in this language.

If incorporation can be established (on the facts given, this appears to be a difficult
endeavour) candidates needed to establish whether the terms covered the
breaches that arose. If they cover breaches, then the statutory controls (The Unfair
Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations
1999) over the use of terms must be examined and applied. Good attempts to
answer the question considered and applied not only the relevant portions of the
legislation but also those cases which have interpreted the legislation. A very good
attempt to answer the question would consider the differing applications of the
different pieces of regulatory legislation.

In relation to the resignation of the Polish teacher and subsequent lack of

conversation classes, answers should have addressed whether the Unfair Terms in
Consumer Contracts Regulations applied and, if so, whether terms would be
considered unfair under Reg. 5 of the Unfair Terms in Consumer Contracts
Regulations. Good attempts to answer the question would also have scrutinised this
issue in relation to term 1(k) in the indicative and non-exhaustive list set out in
Schedule 2 to the 1999 Regulations. A good answer would identify that terms which
appear in the indicative list raise a presumption of unfairness.

In relation to the deletion of Hubert’s computer files through the computer virus, if it
can be established that the term covers the breach then candidates could have
considered whether Hubert can establish that exclusion of liability is unreasonable
under the Unfair Contract Terms Act 1977 and/or unfair under Reg. 5 of the Unfair
Terms in Consumer Contracts Regulations 1999. A good answer would also
consider upon which party lay the burden of proof of establishing reasonability and
unfairness.

In relation to personal injury, the exclusion of liability would probably be regulated

by both s. 2(1) of the Unfair Contract Terms Act 1977 and Reg. 5 of the Unfair
Terms in Consumer Contracts Regulations 1999 and term 1(a) of the indicative list
in Schedule 2.

A good answer to this question would…

Consider and apply those cases interpreting the relevant legislative provisions.

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Poor answers to this question…

Approached the problem as primarily one of the incorporation of terms into a
contract. Attempts which were focused on exhaustive discussions of the nature and
processes of incorporation failed to address the principal issues presented in this
problem, that of the application and effect of the two regulatory regimes.

Question 7

‘English law’s restrictive approach to the equitable remedy of specific

performance is difficult to justify. Since the only reason that parties enter
contracts is to obtain performance, then the law should allow parties to
enforce performance when breach occurs.’

Discuss.

General remarks
Only some candidates attempted to answer this essay question. This question calls
for critical discussion of specific performance and the various ‘bars’ to its
availability.

A good answer to this question would…

Consider and analyse the body of case law which illustrates those factors which
weigh against the remedy, in particular, that of Co-Operative Insurance Society Ltd
v Argyll Stores (Holdings) Ltd (1997).

A good attempt to answer the question would also provide an indication of the
candidate’s own views on whether the remedy should be extended and whether
such an extension would better support the reason(s) that parties enter into
contracts.The candidate’s opinion should be supported by reference to the case
law.

Student extracts

Extract 3
The following represents a significant portion of one candidate’s attempt to answer
this question:

‘Specific performance is a requirement placed by the courts to a party to complete

the performance of the Act if it is in breach of the contract.

This is an equitable remedy and is provided to a party who seeks to rely on it if it

abides by the equitable maxim that he who comes to equity must come with clean
hands.

We can find that justification can be provided to the restrict approach of specific
performance in Equity as equity seeks to look at reasoning, equality and fairness
and thus it will not grant the order of specific performance if there is a contradiction
to the rules of equity.

Equity can limit specific performance in many ways, if it finds that the party is
unable to perform the contract specifically, e.g. where there is an unavailability of a

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good. It may also, however, we can also find that specific performance may be
granted when there is no substitute for the good. Thus, forcing parties to obtain a
performance which is essentially the reason for entering into a contract as held in a
case where the court ordered a company to provide the other party with machinery
which was not available anywhere else.’

Comments
This is a weak attempt to answer the question set. The structure of the answer is
poor and the information presented is disorganised and confusing. The account of
specific performance is limited to a rambling, and at times inaccurate, discussion of
equity in very general terms. No attempt is made, either in this extract or in the
entirety of the answer provided, to examine and analyse the cases concerned with
specific performance.

Extract 4
The following extract is derived from another candidate’s attempt to answer the
same question. This candidate began with a clear introduction to their attempt to
answer the question, followed by a discussion of the nature of specific performance
and the various bars placed upon an award of specific performance. Relevant
cases were used to support this discussion. The candidate then set out their
thoughts on the matter:

‘From the above it can be seen that the courts really have adopted quite a
restrictive approach to the remedy of specific performance . . . but all these
restrictions are either flowing from the nature of this remedy which is equitable or
they are based on pure logic and practical considerations. Why make a party do
something it is incapable of doing? Why force someone to work for somebody else
if that person is unwilling and later the courts might be involved in settling a dispute
on the deliberate non-performance (or maybe non-deliberate, which would be
extremely difficult to assess)?

Besides, damages can be awarded as a flexible element here to mitigate the fact
that e.g. the subject matter of the contract has been used or consumed and it is
physically impossible to comply to the order of specific performance if there is
nothing to return.’

This candidate has attempted to provide their own commentary on the underlying
reasons justifying English law’s restrictive approach to orders of specific
performance. It is this commentary, following upon a detailed discussion and
analysis of the relevant cases, which makes this a good attempt to answer the
question. It is, importantly, an attempt to answer the question asked by the
Examiners and not a general discussion on remedies.

Question 8

Smooth Sam is a disc jockey. He agreed to work last Saturday for the Nelson
Arms pub. The Nelson Arms agreed to provide Sam with all the necessary
equipment for his show including a selection of 200 records. The Nelson
Arms also agreed to pay Sam £1,000 for his show on Saturday and to pay
Dave, Sam’s friend, £150 to set up the equipment before Sam went on stage
and to take it down afterwards. Dave was not a party to the contract between
the Nelson Arms and Sam.

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LA1040 Elements of the law of contract

On Saturday, Dave arrived at the Nelson Arms early and set up the equipment
for Sam. However, when Sam arrived he found that there was only a selection
of 40 records available. He thereupon informed Tom, the manager of the
Nelson Arms, that he would not perform and left.

Tom was furious. He told Dave to leave the equipment set up and began
telephoning around to find another disc jockey for the evening. He eventually
contacted a disc jockey called Rocking Rod who agreed to perform at the
Nelson Arms that evening for £1,500. Tom agreed to pay for this fee but, when
Rod arrived at the Nelson Arms, Tom found that Dave had taken down the
disc jockey equipment and gone home. Tom was forced to pay two local
youths £75 each to set up the equipment for Rod. Rod then performed that
evening and was very successful.

Sam and Dave are demanding their fees of £1,000 and £150 from the Nelson
Arms. Tom has refused to pay them and is threatening legal action by the
Nelson Arms (which is a limited company) against Sam for breach of contract.

Discuss.

General remarks
Few candidates attempted this question. The question is concerned with what
constitutes a breach of contract and the assessment of damages. Two contracts are
presented: the contract between Sam and the Nelson; and the contract between
Dave and the Nelson. A good attempt to answer the question considers in turn the
issues posed by each of these contracts.

In the case of the contract between Sam and the Nelson, the Nelson has breached
a term of the contract. Was this, however, a repudiatory breach? Was the term in
question a condition, warranty or a sufficiently serious breach of an innominate
term? If the Nelson has not committed an anticipatory breach, Sam has breached
the contract. Candidates need to consider Sam’s liability for damages – an issue
which requires the application of the remoteness test in Hadley v Baxendale (1854)
(and the later cases interpreting and applying Hadley v Baxendale such as The
Achilleas (2008)).

The contract between the Nelson and Dave also needed to be considered. Answers
should have noted that since Dave was not a party to the contract between Sam
and the Nelson that he can only derive a benefit from that contract if he comes
within the Contracts (Rights of Third Parties) Act 1999. Dave probably does,
however, have a form of contract with the Nelson – a contract he has likely
breached by removing the equipment before the performance. Does his breach of
contract dis-entitle him from claiming his fee from the Nelson? Candidates might
also have considered the possible liability of Dave to the Nelson.

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Examiners’ report 2012

LA1040 Elements of the law of contract – Zone B

Introduction
This document sets out the Chief Examiner’s report for the examination paper in
Elements of the Law of Contract – Zone B. It begins with general remarks pertaining
to the examination scripts as a whole before considering each examination
question.

Many candidates answered the questions well. At times, however, some candidates
struggled in the attempt to answer the problem set. Three common difficulties were
exhibited. One was a very fundamental one: an inability to recognise that certain
areas of law were involved in resolving the hypothetical problem. A second difficulty
occurred when candidates did not carefully consider the facts presented in a
problem question; the resulting legal reasoning was often not directed at the issues
presented by the facts. A third, somewhat less fundamental difficulty, was an
inability to recognise the particular and specific issues involved within a broad area
of law which the candidate had recognised as relevant. Candidates might, for
example, identify that the area of law involved was one of contractual formation –
was there an offer made to which an acceptance had been given? – without
identifying that there were problems surrounding the communication of the offer by
the offeror to the offeree. At times, this problem seemed to arise because
candidates appeared to be covering legal issues which had formed examination
questions set in previous years.

Some candidates, in other words, appeared to be reproducing answers to past

examination questions. It must be emphasised that a purpose of the Examiners’
report is to give an indication of a method by which particular questions can be
answered and some indication of the law necessary to answer these questions. The
Examiner’s report is not intended to form a base of specific knowledge which is to
be recited as the answers to future examination questions.
It is extremely important that candidates apply the law to the issues presented in a
problem. Candidates should consider the principles developed within the relevant
cases and the reasons behind these particular principles. These must then be
applied to the problem to resolve it. For many candidates, however, their answer to
a problem question resembled a ‘shopping list’ of cases dutifully recorded in the
examination booklet. The reason for this is likely twofold: first, it is often hard for
intermediate candidates to discern the relevant from the irrelevant and caution
encourages a complete list of cases to ensure that none are omitted; secondly, it is
tempting to produce a lengthy answer in the hope that the Examiner will be
impressed by the breadth of knowledge acquired by the candidate. A successful
answer identifies the issues and applies the relevant law to them. Such an answer
displays not only knowledge, but also understanding of the subject being examined.
The recitation and discussion of cases which are irrelevant to the question serve to
highlight a candidate’s uncertainty as to which issues are involved in the question.
In other instances, some answers appeared chaotic, as if the candidate had hurried
into an issue without full consideration of the question as a whole. Candidates who
prepare a careful plan of their answer before writing it in full will find that the time

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LA1040 Elements of the law of contract

spent in making such a plan is repaid by the clarity of the final answer. Among other
things, it allows candidates to see the interaction of issues before they have
committed themselves to one course or another. It should also prevent candidates
from omitting points they had intended to discuss. Many candidates struggled to
answer essay questions thoroughly. Their attempts were often, and unfortunately,
confined to the recitation of everything they knew about a particular subject. In so
doing, such candidates often presented a great deal of material; this presentation
was marred by an apparent inability to discern the relevant from the irrelevant and a
lack of analysis as to the underlying nature of the question. Candidates must
consider whether or not they are addressing their answer to the question as asked.
A part of this answer will, necessarily, involve legal analysis. In other instances,
candidates were unable to answer the question asked in an essay question. They
chose, instead, to adapt the question to a topic that they did know something about.
Such an attempt is not, however, an answer to the question asked. It also leaves
the Examiners with the impression that the candidates are unable to answer four
questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the balance of the paper.

It goes without saying that it is difficult to succeed where all of a candidate’s efforts
are concentrated on two or three answers when the examination paper requires
four questions to be answered. A number of candidates did not appear to have
sufficient knowledge of contract law to attempt four questions. Lastly, the
Examiners for Elements of the law of contract wish to emphasise the importance
of writing the answers clearly. It is difficult, and sometimes impossible, to assess the
illegible.

Specific comments on questions

Question 1

On June 5 Alvin wrote to Bob offering to sell 500 bags of sand at £20 per bag.
On June 7 Bob posted a reply in which he accepted Alvin’s offer but added
that if he did not hear to the contrary he would assume that the price included
delivery to his (Bob’s) yard. The following morning, before Bob’s letter arrived
at Alvin’s office, Alvin read a posting on the internet which stated that the
price of sand was about to fall and he immediately sent an email to Bob
stating ‘our price of £20 includes delivery’.

On receiving Alvin’s email at 11am on June 8, Bob posted a letter to Alvin

confirming his acceptance of Alvin’s terms. By mid-day, however, Bob also
saw the posting on the internet which indicated that sand prices were about
to fall and, having considered the matter, sent an email to Alvin stating
‘Decline your offer of sand’.

The price of sand did fall to £15 per bag and Bob refuses to accept any sand
from Alvin.

Advise Alvin.

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 Examiners’ report 2012

General remarks
This was a popular question and most candidates attempted to answer it. On the
whole, the attempts were good ones. The question requires a consideration of the
law surrounding offer and acceptance with a particular focus on the formation of
contracts at a distance using different methods of communication. Candidates were
required to break the problem down into its constituent stages and analyse each in
turn.

On the basis of the existing case law, Alvin’s initial letter is clearly an offer but is
Bob’s reply of the 7th an acceptance or a counter-offer? On balance, the authorities
indicate it is a counter-offer – the difficulty is that it requires an acceptance by
silence. As a general rule (see, for example, Felthouse v Bindley (1862)) there can
be no acceptance by silence. Alvin’s email is thus a new offer but it ‘crosses’ with
B’s counter-offer. The crossing of offers, on the existing authorities, generally does
not result in a contract. When Bob writes to accept the offer in A’s email, has this
acceptance been communicated and thus a contract formed? The resolution of this
question turns on an application of the postal acceptance rules (for example,
Household Fire & Carriage Insurance v Grant (1879), Holwell Securities Ltd v
Hughes (1973)) and the rules concerned with instantaneous communications.
Finally, can B withdraw his purported acceptance by a later email? A resolution to
this difficulty requires an examination of the few authorities dealing with electronic
communications and their relationship to the earlier authorities concerned with
communications at a distance. A good attempt to answer the question might also
consider the applicability of Manchester Diocesan Council of Education v
Commercial & General Investments (1969)) to the problem.

Poor answers to this question…

Most commonly presented a two-fold weakness in their attempts to answer the

question. The first weakness was presented in those attempts which were not clear
as to what specific issues were established on the facts given. In these cases, a
general discussion of offer and acceptance were substituted for a suggested
resolution of the problems.

The second weakness presented was in those attempts which avoided a

consideration of the nature of an acceptance and, in particular, in relation to
electronic methods of communication. English law has not settled on a definitive
answer to these problems. It is for this reason that the Examiners have sought to
raise the matter in this examination question because it allows them to assess the
ability of candidates to explore the possibilities on the basis of analogous cases.

Question 2

‘The doctrine of consideration is highly unsatisfactory since it often seems

that the courts simply “find” consideration where they believe that parties
should be bound by their agreement. In addition, it is difficult to justify the
different treatment given to promises to pay more (as occurred in Williams v
Roffey Bros) and those to accept less (as occurred in Foakes v Beer).’

Discuss.

General remarks
This was also a popular question with candidates.

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LA1040 Elements of the law of contract

This broad essay question called for a discussion of the courts’ approach to the
doctrine of consideration and some of the inconsistencies that can be found within
the body of case law. It also asked candidates to discuss whether the expansion of
consideration through the notion of practical benefit in cases where the promise is
one to pay more (Williams v Roffey Bros (1989)) but not where the promise is one
to accept less (for example, Foakes v Beer (1884), Re Selectmove (1993)) can be
justified. A good attempt at answering the question would also include a discussion
of how promissory estoppel might operate to enforce promises to accept less, but
not those promises to pay more.

Poor answers to this question…

Consisted of a recitation of all the candidate remembered about consideration with

little or no detailed application of this knowledge to answering the question set.

Question 3

Chloe is the managing director of a whisky distillery, Glencrows. In an effort

to increase sales across Europe, she enters into negotiations with Derek, a
European distributor of alcoholic beverages. She tells Derek that Glencrows’
new whisky, Burns, is of the finest quality yet and that this type of dry whisky
always sells well across Europe. She also informs Derek that McDougal, the
famous whisky connoisseur, works at Glencrows and, if Derek distributes the
whisky, he will get to work with him. Derek has never heard of McDougal and
is not interested in celebrity culture. However, he finds Chloe very attractive
and wishes to get to know her better. He also wants to use this opportunity to
expand his business into the whisky market, having formerly concentrated
his business solely on wine and beer. He therefore contracts with Chloe to
distribute Burns across central Europe.

Derek’s attempts to break into the European whisky market are disastrous. It
is well known in the whisky industry that dry whisky is unpopular in Europe
and will not sell. Derek realises, however, that McDougal is a hugely popular
television celebrity in Europe and believes that his association with
Glencrows will help Derek to sell the whisky. However, Derek now discovers
that a week before he signed the contract with Chloe, McDougal gave Chloe
notice to leave Glencrows and no longer works there. Derek is distraught. In
addition, the failure of his whisky venture means that he has been unable to
invest in a new brandy liqueur which is proving extremely profitable in
Europe.

Advise Derek.

General remarks
This popular question called for a discussion of the law relating to
misrepresentation. A number of issues are presented by the facts given. These
issues were best dealt with in order.

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 Examiners’ report 2012

The general issue presented by these facts called for a discussion on the law
relating to misrepresentation. The first particular issue raised is whether Chloe’s
statements are warranties or representations. On the facts given, and on the basis
of the existing case law, it would seem that they are likely to be the latter.

A good answer to this question…

Might consider the possibility of whether or not the statements are both.

The next particular presented is whether statements are actionable as

misrepresentations. In relation to the statements concerning the quality and selling
potential of the whisky, candidates should discuss, in particular, whether they may
be statements of fact or mere puff or opinion. An application of the criteria in the
cases was necessary to resolve these points. Good attempts to answer the
question explicitly applied the legal criteria to the facts given. Thus, in the
determination of whether the statements were opinion, and the possibility that they
might be actionable as such, the relative expertise of Chloe and Derek with regard
to the whisky market is relevant. In relation to the statement concerning McDougal,
the attempted answers needed to consider whether the statement induced Derek to
enter into the contract. In addition, attempts to resolve this issue also needed to
address the law, both statutory and common law, relating to continuing
representations.

In the event that the requirements of an actionable misrepresentation are met,

candidates then needed to consider the remedies available to Derek. A good
attempt to answer the question would consider the nature of the various forms of
actionable misrepresentation with a comparison of the different remedies available
for each form.

A good attempt to answer the question would also focus on the desirability of s. 2(1)
of the Misrepresentation Act 1967 and the factors that made this the most desirable
form of remedy available to Derek. In this consideration the decision in Royscott v
Rogerson (1991) should be applied to determine whether there could be a recovery
for the loss of an opportunity (the inability to invest in brandy liqueur).

Poor answers to the question…

Either failed to identify the issues presented by the problem; or failed to isolate the
particular issues presented. In these cases, the attempts to answer the question
consisted of largely irrelevant material or material that was not applied to the
resolution of the particular problem.

A frequent weakness encountered by candidates in attempting to answer this

question was to ignore the application of the Misrepresentation Act 1967 and
consider, instead, the tort of deceit.

Question 4

John and Kester Ltd contract for John to sell Kester 50 acres of land. The
contract was entered into on February 13 and the land was to be conveyed to
Kester on March 1. The purchase price was £2,000,000. On February 1
Parliament passed the (fictitious) Planning and Restriction of Residential
Development Act. The Act came into force on February 10 and its effect was
to prohibit the residential development of the 50 acres.

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LA1040 Elements of the law of contract

Neither party was aware of the legislation at the time of contracting. Kester
paid to John a deposit of £200,000. Kester subsequently discovered the
planning restrictions before March 1 and refused to complete the contract of
sale. John sued for specific performance of the contract and Kester counter-
claimed for the return of its deposit. The land, so restricted, is worth £100,000.

Advise John.

General remarks
Many candidates attempted to answer this question. Most of these attempts
successfully identified that the problem presented issues concerned with
contractual mistake. To resolve this problem, candidates needed to consider
whether or not a sufficiently fundamental mistake had been made such that the
formation of the contract was called into question. The particular mistake is a
mistake as to the quality of the subject matter. The treatment of such a mistake in
English law is unpredictable and this unpredictability gave candidates a wide scope
to discuss the relevant cases (eg Bell v Lever Bros (1931), Great Peace Shipping
Ltd v Tsavliris Salvage (International) Ltd (2002)) and apply this law to the facts
given.

A good answer to this question would…

Also consider the potential scope, if any, for the application of the decision in Solle v
Butcher (1949) following Great Peace Shipping. Is it still possible for a contract to
be voidable as a result of a mistake? A good attempt to answer the question would
consider the distinction between a void and a voidable contract. In addition, is an
action for specific performance available in these circumstances?

A very good attempt to answer this question might also consider whether the
particular mistake is a mistake of law rather than fact and the difficulties presented
by such a mistake (as are apparent in the decision in Brennan v Bolt Burdon (2004)

Poor answers to this question…

Most commonly produced a general, and largely irrelevant, discussion of

contractual mistake. Many candidates also attempted to answer the question on the
basis that the particular mistake concerned was the sale of a non-existent subject
matter within the application of cases such as Couturier v Hastie (1856).

Question 5

‘English law provides that a stranger to a contract can neither be bound by

the contract nor derive an enforceable benefit from the contract. Such
restrictions are justifiable.’

Discuss.

General remarks
This was not a popular question with candidates.

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 Examiners’ report 2012

A good answer to this question would…

Consider the doctrine of privity and the reasons for the doctrine. In particular, what
are the justifications for privity?

The question also called for a consideration of the ways in which the doctrine can
be avoided or circumvented, both at common law, or under the Contracts (Rights of
Third Parties) Act 1999.

Good attempts to answer this question also considered those cases which have
interpreted the 1999 Act.

Poor answers to this question…

Mostly took one of two forms. The first was to produce an answer which discussed
largely irrelevant matters or focused in an unduly narrow fashion upon one common
law device to circumvent privity. These attempts were weak because they did not
address the question set by the Examiners.

Another form of weakness was to produce a précis of the 1999 Act; in some cases,
candidates merely copied portions of the legislation from their statute book into their
examination booklet. Again, these were weak attempts because they did not
address the question set by the Examiners.

Question 6

Chardonnay regularly visits a London nightclub called Sensations. She

always leaves her coat in the nightclub cloakroom and is given a ticket in
exchange before entering the nightclub. On the back of the ticket is some
small print which reads: “Sensations’ liability for loss or damage to personal
property caused by any act or omission by an employee of Sensations is
limited to £20.”

Chardonnay has recently bought a new leopard print coat worth £400. As
usual, she leaves her coat with the cloakroom attendant. The nightclub is
busier than usual and the cloakroom attendant forgets to give her a ticket this
time. While Chardonnay is in the nightclub, the cloakroom attendant leaves
the cloakroom open for ten minutes while he has his break. Hazel takes this
opportunity to enter the cloakroom and steal Chardonnay’s coat.

Wayne also frequents Sensations on a regular basis since it is the perfect

venue for entertaining his business clients. He has recently decided to
become a member of the club since the membership allows him access to the
VIP area at the back of the nightclub and free champagne. On joining, his
membership package contained the following term and condition:
“Sensations reserves the right to alter elements of its membership benefits
without prior notice.”

Wayne brings one of his clients to Sensations. He tries to enter the VIP area
but is denied access. The attendant explains that only celebrities are now
able to use this area. When ordering some champagne, he is charged £300.

Advise Chardonnay and Wayne.

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LA1040 Elements of the law of contract

General remarks
A large number of candidates attempted this question. The question is concerned
with the incorporation of terms into a contract, whether the terms are applicable to
the circumstances that have arisen and the statutory regulation of the terms.

A good answer to this question would…

Begin by identifying the particular issues raised by the given facts and consider
each in turn.

The first issue that arises is in relation to Chardonnay and whether or not the
limitation clause on the back of the ticket is incorporated into the contract. To
resolve this issue it was necessary to examine and apply the criteria established in
those cases concerned with the incorporation of terms by notice. A good answer
would also consider the possible applicability of the cases concerned with
incorporation by way of previous dealing (because ‘Chardonnay regularly visits a
London nightclub called Sensations’).

If the clause were found to be incorporated, it is then necessary to consider whether

or not the clause would cover the breach of contract which occurs when the
attendant leaves the cloakroom.

The next issue to be resolved is the effect of the legislation upon the clause.
Candidates needed to consider and apply the statutory controls (the Unfair Contract
Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999)
which would regulate such a clause in a consumer contract. Both s.2(2) of the
Unfair Contract Terms Act 1977 is relevant as well as Reg. 5 of the Unfair Terms in
Consumer Contracts Regulations 1999. In relation to the former sub-section,
candidates would need to consider, through an application of the relevant case law,
whether or not Sensations can show that the clause is reasonable under s. 11 of
the Unfair Contract Terms Act. In relation to the latter regulation, candidates would
need to consider, through an application of the relevant case law, whether the
clause was unfair. In relation to the consideration of unreasonableness under
s. 2(2) of the Unfair Contract Terms Act 1977, candidates needed to discuss the
case law that has interpreted s.11 (for example, Mitchell Ltd v Finney Lock Seeds
Ltd (1983)). Candidates should display an awareness that although Schedule 2 only
applies to ss.6 and 7 of the Unfair Contract Terms Act 1977, it has been applied as
a general guide to reasonableness by the courts (for example, Granville Oil v Davis
Turner (2003),Overseas Medical Supplies Ltd v Orient Transport Ltd (1999)).

Having resolved the issues arising in relation to the limitation clause which pertains
to Chardonnay, candidates needed to consider Wayne’s situation. Once again, the
first issue to be determined, by an application of the case law, is whether or not the
particular term was incorporated into the contract. On the facts it seems that
reasonable notice of the clause was given at the time the contract was formed (‘on
joining’) but there is some ambiguity on this point and a good attempt to answer the
question considered this point. If incorporation was effective, candidates then
needed to consider whether the clause covered the circumstances that have arisen.
The final issue to be considered was how, if at all, statutory controls applied to the
term. A complication in this consideration is whether or not Wayne deals as a
consumer in relation to his membership with Sensations. This is particularly relevant
in relation to the Unfair Terms in Consumer Contracts Regulations 1999. If he does
come within the particular definition of a consumer, then the application of Reg. 5 of
the Unfair Terms in Consumer Contracts Regulations 1999 is relevant. In addition,

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 Examiners’ report 2012

the application term 1(k) of Schedule 2 needed to be considered. A good attempt at

the answer would identify that, in practice, terms which appear on this indicative list
would raise a presumption of unfairness. A good attempt at the answer would also
consider the possible application of s. 3(2) of the Unfair Contract Terms Act 1977
and whether or not the clause was reasonable within the meaning of the legislation
and the relevant cases identified above.

The most common weakness presented in attempts to answer this question was to
assume that the particular terms were incorporated into the contract without any
attempt to explain on what basis this incorporation occurred. Another weakness
exhibited in many attempts was to discuss the regulatory regimes created by the
Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts
Regulations 1999 without any examination or application of the cases which have
interpreted the relevant provisions of these legislative schemes.

Question 7

Violet has just purchased an old farmhouse that she plans to convert into a
stylish hotel. She enters into two contracts:

i) The first is with a local building company, BotchUp Ltd, to build a

timber roof for £20,000. She specifies that the builders source the
timber from the local forests. This is because she wants to minimise
the environmental impact of the hotel’s construction as well as to
align the colouring of the roof with the hues of the natural landscape.
BotchUp Ltd instead use their usual timber suppliers, importing the
wood from Germany. Violet is furious. The hue of the timber is slightly
different from that of the local timber, although it is difficult for anyone
but an expert to perceive the difference. She is also angry because the
use of foreign wood will harm the advertised image of the hotel as a
building in peaceful harmony with its natural habitat. She insists that
she needs to employ another company, Woodies, to tear down the
roof and re-build another one, this time using local timber. Woodies
have quoted £25,000 for the work.

ii) The second contract is with a local artist, Percy, whom Violet
commissions to paint her portrait for the hotel entrance. Percy has a
reputation for painting his subjects in a flattering light and Violet is
delighted to secure his services. However, on the day of her first
sitting Percy telephones Violet to say that he has been offered more
profitable work and will not be coming. Violet is furious and demands
that he attend the sitting.

Advise Violet.

General remarks
This question was infrequently attempted and, when it was, candidates struggled to
identify the relevant issues. The question is concerned with breach of contract and
the remedies available for breach.

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LA1040 Elements of the law of contract

A good answer to this question would…

Need to consider the nature of Violet’s contracts with each of BotchUp and Percy
and whether or not either (or both) of these contracts had been breached. If they
have been breached, it was important to consider what, if any, remedies might be
available to Violet.

In relation to BotchUp, candidates needed to establish whether the use of timber

from Germany, rather than local forests as specified by Violet, constitutes a breach
of contract. If so, then the question of remedies arises. Candidates needed to
discuss the problem as to the basis on which damages should be awarded. It
seems clear from the facts that Violet wishes to claim damages to reflect cost of
cure. However, cost of cure damages are likely to overcompensate. Are diminution
of value damages likely to undercompensate Violet? Good attempts to answer this
question considered whether Violet’s claim that foreign wood might damage the
advertised image of the hotel as in harmony with the natural habitat and the
difficulties involved in quantifying such a loss.

In relation to Percy, candidates needed to discuss the limitations in the award of

specific performance. On balance, it seemed unlikely that Violet would be able to
enforce performance of the contract through such an award. If, as is likely, the only
remedy available would be damages, then candidates should discuss the difficulty
in establishing the loss to Violet caused by Percy’s breach.

Question 8

Sarah agrees to give William private tuition for his Law of Contract
examination to be held in eight months’ time. The fee is £2,000, of which
William pays £300, with the balance to be paid on completion of the tuition.
Sarah spends £400 in the preparation of some printed tuition notes. After two
months Sarah goes to Spain for a week long holiday at Christmas. Whilst on
holiday she is wrongly arrested, having been mistaken for a notorious
criminal, and detained for two months. On her return to England she
discovers that William has engaged another tutor and is demanding the
return of his £300. Sarah sues for the balance of the £2,000.

Advise Sarah.

How would your answer differ, if at all, if Sarah had been convicted and
detained for shoplifting?

General remarks
This question was infrequently attempted by candidates. The question is concerned
with two principal problems. First, was Sarah’s detention in Spain for two months a
matter which frustrated the contract between her and William?
Consider the common law cases concerned with establishing frustration and, in
particular, those concerned with the provision of personal services.
Second, assuming the contract has been frustrated, how are the liabilities between
these parties resolved through the application of the Law Reform (Frustrated
Contracts) Act 1943?

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The variant to the question invites candidates to consider that if Sarah were
detained for shoplifting the detention would be her fault and thus result in a breach
of her contract with William rather than a frustration of that contract.
A good attempt to answer the question would…
Compare the remedial differences which attend the different reasons for the
detention.

Poor answers to this question…

Were exhibited in those answers which were concerned entirely with the question of
breach without any apparent awareness of the possible application of frustration.

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 Examiners’ report 2013

Examiners’ report 2013

LA1040 Elements of the law of contract – Zone A

Introduction
Many candidates answered the questions well. At times, however, some candidates
struggled. There were three common difficulties. The first was fundamental: an
inability to recognise that certain areas of law were involved in resolving the
problem. Candidates might, for example, fail to recognise that when asked to advise
party C given a contract between A and B (for the possible benefit of C) that the
primary issues involved were privity of contract and the rights of third parties.
A second difficulty was not carefully considering the facts presented in a problem
question. The resulting legal reasoning was often not directed at the given issues.
In some instances, a general discussion of a particular area of law was presented,
but without any attempt to apply this law towards the resolution of the problem
given. In other instances, candidates discussed, and attempted to apply, law which
was irrelevant to the issues raised in the particular problem.
A third was an inability to recognise the particular and specific issues involved
within a broad area of law which the candidate had recognised as relevant. At
times, this problem seemed to arise because candidates appeared to be covering
legal issues which had formed examination questions set in previous years. Some
candidates, in other words, appeared to be reproducing answers to past
examination questions. The purpose of the Examiners’ reports is to give an
indication of a method by which particular questions can be answered and some
indication of the law necessary to answer these questions. The reports are not
intended to form a base of specific knowledge which is to be recited as the answers
to future examination questions.
It is extremely important that candidates apply the law to the issues presented in a
problem. Such an answer displays not only knowledge, but also understanding of
the subject being examined. Candidates should consider the principles developed
within the relevant cases and the reasons behind these particular principles. These
must then be applied to the problem to resolve it. For many candidates, however,
their answer to a problem question resembled a ‘shopping list’ of cases. The
recitation and discussion of cases which are irrelevant to the question only
highlights a candidate’s uncertainty as to which issues are involved in the question.
In other instances, answers appeared chaotic, as if the candidate had hurried into
an answer without full consideration of the question as a whole. Candidates who
prepare a careful plan of their answer before writing it in full will find that the time
spent in making such a plan is repaid by the clarity of the final answer. Amongst
other things, this approach allows candidates to see the interaction of issues before
they have committed themselves to one course or another. It should also prevent
candidates from omitting points they had intended to discuss. Many candidates
struggled to answer essay questions thoroughly, often reciting everything they knew
about a particular subject. This shows an inability to discern the relevant from the

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LA1040 Elements of the law of contract

irrelevant and a lack of analysis as to the underlying nature of the question.

Candidates must consider whether or not they are addressing their answer to the
question asked. A part of this answer will, necessarily, involve legal analysis.
In other instances, candidates were unable to answer the question asked and
attempted to adapt the question to a topic that they did know something about. This
results in low marks and also leaves the Examiners with the impression that the
candidates are unable to answer four questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the rest of the paper. A number of candidates
did not appear to have sufficient knowledge of contract law to attempt four
questions.
Lastly, the Examiners wish to emphasise the importance of using clear handwriting.

Specific comments on questions

Question 1
On the 2nd of April, an announcement appears in the newspapers to the effect
that shares in Digger, a gold exploration company, may be subscribed for £5
each.
Later that day Goldbug sees the announcement and fills in the application
form in the newspaper requesting 1,000 shares. His application is received by
Digger the following day and the Company Secretary promptly sends the
share certificates to Goldbug by that morning’s post. However, Goldbug
changes his mind and on the same afternoon (the 3rd) he posts a letter,
withdrawing his application to Digger.
During the day a rich seam of gold is discovered by Digger in Cumbria and
the Company Secretary telephones Goldbug informing him that they do not
wish to accept his application and would like him to return the certificates
when they arrive.
By the time he receives the Secretary’s request, Goldbug has heard of the
gold discovery and wishes to buy the shares after all.
Advise Goldbug.
General remarks
This question is concerned with the formation of a contract and, in particular, the
effect of the various communications between Goldbug and the Digger company.
Has Goldbug a contract for the purchase of shares from Digger?
Candidates needed to ascertain the requirements necessary for an offer applying
the criteria established in cases such as Storer v Manchester City Council (1974),
Gibson v Manchester City Council (1979) and Centrovincial Estates v Merchant
Investors Assurance Company (1983). If an offer was made, at what point was it
made? Candidates needed to apply the legal criteria to the facts provided to resolve
this question. Digger’s advertisement is likely an invitation to treat but Goldbug’s
completion of the form and payment is likely an offer. An offer, to be effective, must
be actually communicated to the offeree (see, for example, R v Clarke (1927)).
It is said that a contract requires an acceptance of a particular offer and the next
issue which arises is whether or not Goldbug’s offer is accepted. In other words,

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 Examiners’ report 2013

when the Company Secretary posts the share certificates to Goldbug in the morning
post, is this an acceptance of Goldbug’s offer? An acceptance takes effect upon
communication but there are exceptions to this rule. One of these exceptions is the
postal acceptance rules and candidates needed to consider whether or not the
Company Secretary’s posting of the share certificates is within this exception. The
rules surrounding postal acceptance need to be analysed and applied to this
situation to resolve this issue. While many candidates simply referred to the
decision in Adams v Lindsell (1818), a detailed consideration of the decision in
Household Fire Insurance v Grant (1879) repaid the effort expended given the
factual similarities between that case and the facts provided. Many candidates
considered and referred to the later decision in Holwell Securities v Hughes (1974)
in order to develop a critical decision of the utility of the postal acceptance rules in
an area of instantaneous, and near instantaneous, communications.
The next issue presented by these facts is Goldbug’s next action when he then
purports to revoke his offer. Is this valid? If so, why is it valid? If the postal
acceptance rules apply on the basis set out above, a valid contract is formed when
the Company Secretary posts the share certificates with the result that Goldbug
cannot now purport to revoke his offer because it has been accepted and a contract
formed (see, for example, Byrne v van Tienhoven (1880) for such reasoning). This
is not a case in which Goldbug attempts to use a quicker method of revoking his
posted offer (and thus the reasoning in Dunmore v Alexander probably does not
assist greatly in the resolution of this point).
In addition Digger has attempted to withdraw its acceptance after it was posted but
before it is reached by Goldbug – is this attempt effective? In this instance the
offeree’s change of mind is communicated to the offeror using a faster method of
communication. There is an absence of English authority on this point although the
decisions in Dunmore v Alexander (1830) (Scotland) and Wenkheim v Arndt (1873)
(New Zealand) are of persuasive effect in England. These are not, however, binding
decisions and candidates are best advised to consider this as a matter of principle.
To this end, Treitel suggests that ‘the issue is whether the offeror would be unjustly
prejudiced by allowing the offeree to rely on the subsequent revocation’.
In this question, it is particularly relevant that when the Company Secretary has
telephoned Goldbug, Goldbug has already posted his own revocation. It seems
unlikely, as a matter of policy, that a court would wish to allow him to revoke the
revocation in light of the gold discovery.
Common errors
Reciting as many case names as possible without any attempt to analyse the cases
and apply the criteria to the facts presented in the problem. This was particularly
unfortunate where the cases recited were in no way relevant to answering the
particular issues raised in these facts.
A good answer to this question would…
take a critical view of the various rules presented by the cases concerned with offer
and acceptance to reach a more principled result in this case.
Poor answers to this question…
displayed an inability, or a reluctance, to identify and isolate the relevant issues
presented by the facts given.
Student extract 1
This candidate began their answer by stating that the question was concerned with
‘whether there has been a contract formed between Goldbug and Digger’. The
candidate then continued in the next paragraph to state that:

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LA1040 Elements of the law of contract

‘the first element which the court may consider is whether the advertisement
which has been read by Goldbug amounts to an offer or an invitation to treat.
An offer is an expression of willingness to contract on certain terms which [is]
in turn accepted [and] must be acted upon by the offeror while an invitation to
treat is when some kind of transaction involves a preliminary stage which one
party invites the other to make a proposition.The answer then continued to
explain and consider how these statements of law were established by the
decisions in Storer v Manchester City Council and Gibson v Manchester City
Council.
Comment on extract 1
This extract demonstrates a good introduction to answering the question set. The
principal question to be addressed was set out in the first paragraph and the
relevant issues correctly identified. The candidate then successfully identified that
the first issue (or element) to be addressed was the effect of Digger’s
announcement in the newspaper. The candidate set out the possible effects as
either an offer or an invitation to treat and succinctly summarised what each was
and how they were distinct from each other. The relevant cases establishing these
propositions were then discussed and applied to the particular facts given, with the
correct conclusion reached – namely, that the announcement could not be an offer.
Student extract 2
The candidate began by stating that the question involved issues concerned with
contractual formation and then outlined Goldbug’s request for 1,000 shares. The
answer then stated that:
this offer by Goldbug may be said to be not accepted as the facts show.
When the secretary posted acceptance it may be said that the contract is
made. The general postal rule states that the offer is accepted when the post
is sent (Alder v George). However, if the court is persuaded to apply the
permissive rule stated in Shuey v USA – which states that the post when
received will constitute as an acceptance – then it may be established that
the offer is not accepted by the Digger and thus, no contract is formed.
Goldbug withdrew his offer before receiving the Digger’s post. If the rule in
Shuey v USA is applied then there is no breach of contract by Goldbug.
However if the general postal rule – as mentioned above – is followed then
Goldbug will be held liable for a breach of contract.
The situation gets even more confusing as Digger’s acceptance is not yet
received by Goldbug and Digger withdraws its acceptance.
Comment on extract 2
In contrast to the first extract, there are a number of unfortunate difficulties apparent
in the second extract. The candidate’s grammar is weak, a fact which mars the
candidate’s answer as the attempt lacks clarity and precision. The candidate
applies the postal acceptance rule without considering the circumstances in which
this rule is applied or that the rule is actually an exception to the general rule that
only a communicated acceptance creates a binding contract. An uncertain grasp of
the law is then presented when the answer cites the wrong authorities and, in so
doing, attributes propositions to them which these authorities do not support. The
answer also displays certain confusion as to what is necessary to form a binding
contract and when this contract would be formed. The same confusions were
repeated throughout the answer and the candidate concluded with an erroneous
statement, namely, that Goldbug would be entitled to succeed in a claim for the
specific performance of the contract. Altogether, so little knowledge and
understanding of the law surrounding contractual formation was displayed that this
candidate received a fail mark.

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 Examiners’ report 2013

Question 2
Robbie runs a fairground, Toppers, and hires a big dipper from Fred for
£3,000 per annum. Times are tough, however, and the bad weather has
affected business at the fairground. Robbie asks Fred whether he can have a
reduction in rent until he gets on his feet again. He intends to use the money,
thereby saved to advertise the fairground more widely. Fred agrees to reduce
Robbie’s rent by £1,000 per annum until business improves. Delighted,
Robbie immediately spends £1,000 on advertising, in the hope that it will
attract more visitors. However, Fred now regrets his promise and demands
that Robbie pay him the full amount of rent.
Spooks operates the ghost train at the fairground and receives a 50% share of
the ticket sales. He wishes to buy his wife a new car and needs some extra
cash. He telephones Robbie and asks him to increase his share of the ticket
sales to 75% for a twelve-month period. Ghost train operators are specialists
and extremely hard to find. However, although Robbie does not want to lose
Spooks, he will find it a financial strain to fund the higher commission rate.
Robbie asks Spooks if he can think about this request for a few days. Spooks
agrees. The next day, however, Spooks gets an offer from another fairground,
offering a 75% share of the ticket sales to run their ghost train. He goes to
Robbie’s home and threatens to quit his job unless Robbie gives him the 75%
share of the ticket sales. Robbie agrees. Three months later he tells Spooks
that next month he will return to the 50% share of the ticket sales.
Robbie asks his cousin, Claude, who is a carpenter, to paint the big wheel. He
has often asked Claude to do jobs around the fairground and always pays
him. When Claude finishes, Robbie is delighted and says that he will pay him
£350. However, following a family argument, Robbie now refuses to pay him.
Advise Robbie.
General remarks
This problem question contains three parts. Each part deals with issues of
contractual formation, namely whether or not consideration is provided. In one
instance it is also relevant as to whether or not a promise unsupported by
consideration might be binding according to the principle in High Trees House.
The first part of the question asked candidates to address the law relating to
consideration and promissory estoppel. Candidates needed to examine Fred’s
promise to Robbie that he will reduce the hire fee of the big dipper from £3,000 to
£2,000 per annum ‘until business improves’. The question requires a consideration
and application of the criteria established in Central London Property Trust Ltd v
High Trees House Ltd (1947) and subsequent decisions to the facts given. A good
answer would also indicate that the effect of the decision in Re Selectmove (1995)
likely means that there can be no consideration in the form of a practical benefit
according to the reasoning in the decision of Williams v Roffey Bros & Nicholls
(Contractors) Ltd (1991). The facts presented here (namely Fred’s demand that
Robbie repay him) also indicate a further issue presented in relation to the principle
in High Trees House – namely, whether the outstanding amounts are permanently
extinguished or not. The decision of the Court of Appeal in Collier v P. & M.J. Wright
(Holdings) Ltd (2007) is of assistance in considering this particular point.
The second part of the problem deals with the variation of a contract and whether
consideration has been given for the modification such that the modification
constitutes a binding contractual obligation. Candidates needed to discuss whether
Robbie receives a ‘practical benefit’ that might constitute consideration in light of the
decision of Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) and cases

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LA1040 Elements of the law of contract

subsequent to this, notably Re Selectmove. A possible difficulty in the application of

Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) is that Spook’s actions
might constitute economic duress. Candidates needed to consider whether or not,
according to the cases concerned with economic duress, that this was made out. If
his actions constituted economic duress, it seems on balance that there is no
practical benefit within the meaning of Williams v Roffey Bros & Nicholls
(Contractors) Ltd (1991) although it could be argued, based on the reasoning and
decision in Adam Opel GmbH, Renault S.A. v Mitras Automotive (UK) Limited
(2007) that even in the presence of duress a practical benefit can exist.
Finally, the third part of the problem required candidates to consider whether or not
there was an intention to create legal relations, given the relationship between
Robbie and Claude (they are cousins). An additional difficulty here is that Robbie’s
promise to pay Claude does not appear to be supported by consideration because
the consideration is past. It is possible, though, that the promise fits within the
exceptions to past consideration established by the criteria in the Privy Council’s
decision in Pao On v Lau Yiu Long (1980). A good attempt to answer the question
would consider the conceptual links between consideration and an intention to
create legal relations and the practical ramifications of these contractual doctrines in
this case.
Common errors
Reciting every major case concerned with consideration and promissory estoppel
without an examination of how, or why, such a case would be relevant to the
particular problem given. Such an error indicates a poor understanding of the
relevant law and how to apply it to the given facts.
A good answer to this question would…
isolate the relevant issues from the facts given and resolve these issues through an
application of the criteria in the case law to resolve these issues. A very good
attempt to answer these questions would examine the underlying conceptual links
between the different contractual doctrines presented by these facts and discuss
these links in relation to the facts given.
Poor answers to this question…
displayed an inability, or a reluctance, to identify and isolate the relevant issues
presented by the facts given.
Question 3
Honey is planning for her wedding in August and decides to visit Romantic
Weddings, a local shop that advertises itself as providing ‘Stress Free
Weddings or Your Money Back!’. Honey is particularly attracted by the shop’s
photos of romantic castles and lakes and asks Amir, the manager of
Romantic Weddings, for more information about a possible venue for her
wedding reception. Amir informs Honey that he can find her the perfect
setting for a romantic wedding, adding that ‘the sweet singing of the birds will
be the only noise to disturb the tranquillity of the day’. He suggests a venue,
Dagenham Manor, and advises that Honey visit it so that she can appreciate
the true beauty of the place for herself. Dagenham Manor is in Romstown, a
town near to where Honey lives. Honey knows Romstown well and is
surprised to hear that it would offer a tranquil and romantic location for her
wedding. However, she notices that she will get special rates if she books
that day and decides to book the venue immediately. Before paying, she asks
Amir how many guests Dagenham Manor will hold. Amir has never visited the
venue and rings a friend, Wayne, who had his wedding there last year. Wayne
tells Amir that it holds about one hundred people and Amir passes this news

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on to Honey. On hearing this, Honey is thrilled. She is expecting 80 guests

and realises Dagenham Manor will be perfect. She goes ahead with the
booking.
The wedding day is a disaster. Dagenham Manor is located on the junction of
a busy motorway and the noise of the passing vehicles reaches unbearable
levels. In addition, the venue is very small and can only accommodate 40
people. As a result, half of Honey’s guests are turned away from the venue.
Amongst those prevented from entering is Mr Bee, Honey’s boss. He is so
angry that he does not give Honey the wedding gift of £10,000 that he had
promised her.
Advise Honey.
General remarks
This question asked candidates to consider and apply the law relating to
misrepresentation. The problem is best dealt with by considering each issue in turn.
The first issue raised is whether Amir’s statements were warranties or
representations. Candidates needed to consider and apply the criteria in the
relevant cases (such as Heilbut, Symons & Co v Buckleton (1913), Oscar Chess
Ltd v Williams (1967) and Esso Petroleum Co Ltd v Mardon (1976)). In this
instance, it seems most likely that the statements are not warranties but are instead
representations or puff.
The next issue raised is the importance of determining, through an application of
the case law to the facts given, whether the statements are actionable as
misrepresentations. It is particularly important to consider a number of statements
made by Amir. These include the statement concerned with the beauty and
tranquility of the venue: is this mere puff or actionable as a misrepresentation? Is
the statement regarding the capacity of the venue an opinion? Is it an opinion which
can be actionable as a misrepresentation? Did either of these statements induce
Honey to enter into the contract? Does it matter that Honey could have verified and
examined the statements by visiting Dagenham Manor? Very good attempts to
answer this question could consider the effect, if any, of Romantic Weddings’
advertisement of ‘Stress Free Weddings or Your Money Back!’.
In the event that the requirements of an actionable misrepresentation can be met,
candidates would then need to consider the remedies available to Honey. This, in
turn, would depend upon the type of misrepresentation made by Amir. A good
answer would focus on the advantages for Honey in pursuing an action under s.2(1)
of the Misrepresentation Act 1967. A claim brought under this section is particularly
advantageous for Honey for two reasons. The first is the difficulty Amir will have in
showing that he had reasonable belief that his statement was true. The
interpretation of reasonable within s.2(1) by the court in Howard Marine & Dredging
v Ogden indicates the difficulties faced by Amir in this regard. A good answer would
compare the complexity of Honey proving a negligent mis-statement or fraud at
common law to the action brought under s.2(1) of the 1967 Act.
The second advantage to Honey in bringing an action under s.2(1) of the 1967 Act
is the calculation of damages, particularly the possibility of claiming damages for
unforeseeable losses. Candidates needed to consider Honey’s possible losses,
including the loss of Mr Bee’s wedding gift. Can damages for such a loss be
recovered under the statute?

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LA1040 Elements of the law of contract

Common errors
Not considering whether the statements were actionable as misrepresentations and
simply discussing various types of misrepresentation.
A good answer to this question would…
isolate the relevant issues from the facts provided, addressed these issues in turn
and recommend that Honey bring an action under s.2(1) of the 1967 Act.
Poor answers to this question…
set out everything the candidate knew about misrepresentation with little attempt to
apply the knowledge to resolve the issues which arose from this particular problem.
Question 4
‘Equity provides various forms of relief in cases of mistake but it will not
provide relief where the common law renders a contract void for common
mistake. This is not a desirable result.’
Discuss.
General remarks
This question required candidates to consider the doctrine of contractual mistake
and the different means by which law and equity respond to mistake. Mistake at
common law, if operative, renders a contract void but equitable relief is more
flexible and takes various forms. In particular, candidates need to consider the
nature of equitable relief and how, if at all, this has been affected by the Court of
Appeal’s decision in Great Peace Shipping v Tsavliris Salvage. Candidates also
needed, given the wording of the question, to consider whether or not rescission in
equity for a common mistake is a remedy which should be retained in English law.
Note that candidates should provide an answer directed to the particular title set
and not a general discussion of mistake in English law.
Common errors
An apparent inability to ascertain what the question called upon candidates to
consider. Also, an inability to structure the answer – many attempts resembled
shopping lists of major mistake cases with no attempt made to analyse the cases in
relation to the title set.
A good answer to this question would…
consider the nature of relief available in law and equity and how and why it differs. A
very good answer considered whether or not this distinction can be maintained and,
if not, how the common law should respond to a contractual mistake.
Poor answers to this question…
consisted of recitations of everything the candidate knew about mistake. In some
cases the material provided was largely irrelevant to answering the question.
Discussions focused entirely, for example, on mistake of identity were misplaced.
Student extract
This candidate began their answer to the question by establishing that while the
common law could find an apparent contract void for mistake, equitable relief for
mistake could take one of three forms. These forms were rectification, a refusal to
grant specific performance or rescission. These concepts were, for several pages,
knowledgeably discussed, with appropriate consideration and employment of
multiple cases concerned with each form of relief. The candidate then analysed the
effect of the House of Lords’ decision in Bell v Lever Bros and Lord Denning’s
consideration of this case in Solle v Butcher. It is at this point that the extract below
appeared:

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 Examiners’ report 2013

The decision of Solle v Butcher has influenced a lot of later decisions

subsequently leading to the decision in Associated Japanese Bank v Credit
du Nord. The flexibility in this case created tension over the relationship
between mistake of law and of equity. This rancor led to the decision in the
leading case of Great Peace Shipping Ltd v Tslaviris Salvage (International)
2002 generally referred to as the Great Peace. This case involved two ships.
One of the ships suffered very severe damages and it was feared that it
might sink. The defendant was recruited to salvage the sinking ship. To this
end they contracted the services of the Great Peace to act as a standby for
the purpose of salvaging lives. At the time the defendant engaged the
claimant he mistakenly believed that the ships were only 35 miles apart.
Immediately after the signing of the contract it was discovered that the ships
were over 400 miles apart. When they contacted a closer substitute ship, the
defendant refused to honour his part of the bargain. The defendant during the
trial proceedings argued that the contract was void for mistake at law and
voidable in equity by reason of mistake. The Court of Appeal in their
judgment reviewed the cases of Bell v Lever Bros and Solle v Butcher. The
concept of equity was extensively evaluated both before and after the case.
The Court found it difficult to reconcile the two and therefore the appeal was
squashed. The ramifications of this decision are yet to be fully determined.
The bottom line is if equity by virtue of this decision lacks the flexibility and
latitude to provide relief, it is difficult to envision circumstances in which any
contract will be affected as to the quality of the subject matter. The doctrine of
the Great Peace has been applied in more recent decisions and the
conclusion derived in that there is effectively no threshold or ambit for the
doctrine of mistake.
In summary, therefore, as a means of conclusion, it is clear that an equity
court can be in a position to rectify an agreement. It can also order or refuse
to order specific performance and can also rescind a contract. However since
the decision in the Great Peace it is clear that the capacity of an equity court
to rescind a contract remains terribly in doubt. This is definitely an
undesirable situation as the law should be consistent to ensure equity and
fair play.
Comment on extract
The strength of this answer can be seen in the manner in which the underlying
issues are considered in the above extract. The candidate successfully identified
the tensions between the common law position and the equitable position. The
answer observes that while some forms of equitable relief are not effected by the
decision in the Great Peace, the ability to rescind a contract for a common mistake
appears to have been removed. The candidate is critical about the current direction
that the law appears to have taken in the Great Peace, a case applied and followed
in subsequent decisions. The essential problem presented by the decision in the
Great Peace – that it appears unlikely that a case of mistake can ever arise if the
case is to be followed – is correctly identified. Although the candidate’s attempt to
answer the question would have been strengthened by a more detailed examination
of Lord Phillips’ judgment in the Great Peace, the attempt was given a high upper
second class mark.

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LA1040 Elements of the law of contract

Question 5
‘Although the doctrine of privity is simple in practice, attempts to circumvent
it introduced unnecessary complications into English law. The Contracts
(Rights of Third Parties) Act 1999 has done little to simplify English law in this
area.’
Discuss.
General remarks
This question required candidates to consider the doctrine of privity and the means
by which its effects can be avoided. Candidates need to consider both how privity
(and, really, the related rules concerned with damages) could be circumvented at
common law and the nature of the rights which can be conferred under the
Contracts (Rights of Third Parties) Act 1999. There have been sufficient cases
decided pursuant to the 1999 Act that it was desirable for candidates to
knowledgeably discuss these cases.
Common errors
Attempting to answer the question by paraphrasing, or even copying out, the
Contracts (Rights of Third Parties) Act 1999. Not only was this an inadequate
attempt to answer the question set but it resulted in attempts which displayed so
little originality and thought on the part of the candidate that little in the way of
marks could be given for the result.
A good answer to this question would…
consider the nature of privity and discuss the various means by which parties can,
at common law, circumvent the operation of privity of contract or the rules
concerned with damages (e.g. the Dunlop v Lambert exception) and assess the
efficacy of these circumventions. A good answer would also attempt to address the
issue of whether the 1999 Act, as interpreted by the cases, rendered the law more
or less complex than it had been at common law.
Poor answers to this question…
either copied out the Act (see above comment) or simply provided a general
discussion of privity of contract in English law without attempting to address the
particular question set.
Question 6
Milo wants to landscape the garden of his house and requires a new
lawnmower. He notices that the local garden supply shop, Lawnz, has special
offers on garden equipment. He enters the shop and immediately notices a
top-of-the-range lawnmower on display. A sign above it states ‘Special Offer!
Terms and Conditions apply – ask within’. Milo asks the shop assistant,
Sebastian, for more information. Sebastian informs Milo that the lawnmower
is being sold at £200 (half the recommended retail price) and that the shop’s
website gives full information on the terms and conditions of all the shop’s
sales. Fearful of missing out on such a great bargain, Milo decides to
purchase the lawnmower immediately. As he is waiting at the cash desk,
Sebastian gives Milo a number of papers and informs Milo that he will find the
lawnmower’s operating instructions amongst them.
Milo wishes to use the lawnmower that afternoon and consults the operating
instructions as soon as he gets home. Amongst the papers he also finds
Lawnz’ terms and conditions of sale. These include the following two terms:
1. Lawnz is not responsible for any damage whatsoever or howsoever
caused when using its products.

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2. Lawnz reserves the right to replace faulty products with a substitute

of their choice.
Despite several attempts at operating the lawnmower Milo cannot get it to
work. He takes it back to Lawnz where Sebastian does some electrical work
on it. Unfortunately, Sebastian has done the work incorrectly and when Milo
attempts to use the lawnmower again it explodes, damaging an expensive
sculpture in his garden. Milo returns to Lawnz and demands that it replaces
the lawnmower and compensates him for the damage caused by the
explosion. Lawnz refuse compensation but offer to give Milo a replacement
lawnmower. The replacement lawnmower is a second-hand one and of far
inferior quality than the one originally purchased by Milo.
Advise Milo.
General remarks
This was a popular question and asked candidates to discuss the law relating to
contractual terms. The following particular issues arose: first, whether or not terms
were implied into contract; second, whether or not Lawnz’s terms had been
incorporated into the contract; third, whether or not the terms were applicable to the
circumstances that have arisen; and, fourth, the statutory regulation of the terms.
The first issue required a consideration of whether or not the contract contained
terms implied by the Sale of Goods Act 1979, particularly s.14, which requires that
goods sold by a seller in the course of his business be of satisfactory quality. Is the
lawnmower purchased by Milo of satisfactory quality?
The second issue was whether terms have been incorporated into the contract. This
required a consideration of the rules and case law relating to incorporation by
reasonable notice. Two issues are relevant in such a consideration: the information
from Sebastian that terms can be consulted on the website and the fact that the
terms are handed to Milo – before purchase, but within the pack of papers given to
him by Sebastian. A good answer identified that it was not clear that there were
contractual documents within the pack of papers. If there were not, what effect
would this have?
If incorporation can be established, it then needed to be established if the terms,
properly interpreted, covered the liability that has arisen. Good answers discussed
the approach of English courts to exemption (in contrast to limitation) of liability
clauses (clause 1) and the approach to clauses which attempt to exclude or limit
liability for negligence.
Candidates should then examine and apply the statutory controls (the Unfair
Contract Terms Act 1977 (UCTA) and the Unfair Terms in Consumer Contracts
Regulations 1999 (UTCCR)) and the cases which have interpreted these two pieces
of legislation. In relation to the damage to the garden sculpture (and any attempt by
Lawnz to rely on term 1), discussion of UCTA s.2(2) and the test of reasonableness
under s.11 and Schedule 2 is relevant, as is case law that interprets s.11 (e.g.
Mitchell v Finney Lock Seeds). Good answers also mentioned that although
Schedule 2 only applied to ss.6 and 7 UCTA, it has been applied as a general guide
to reasonableness (e.g. Granville Oil v Davis Turner). It also needed to be
considered whether the UTCCR applies and, if so, whether term 1 might be
considered unfair under reg.5(1) UTCCR.
In relation to the replacement lawnmower, and any attempt to rely on term 2,
candidates needed to discuss whether the UTCCR apply and, if so, whether the
term would be considered unfair under reg.5(1). Good answers should also
consider whether term 2 falls within the indicative list of Schedule 2 UTCCR.

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LA1040 Elements of the law of contract

Common errors
Addressing only the first of the issues set out above – namely, whether or not the
terms were incorporated into the contract.
A good answer to this question would…
set out the issues with clarity and apply not only the relevant statutory provisions to
the terms in question but also undertake this application with a consideration of the
cases interpreting the legislation. Good answers to this question would also address
the question of which party bore the burden or proof in establishing reasonableness
and unfairness.
Poor answers to this question…
recited, or copied out, the statutory provisions the candidate believed could be
applied to the particular terms in this contract.
Question 7
Arthur was a supplier of horsemeat who was registered as required by the
(fictitious) Horsemeat Supply and Distribution Act 2003. Arthur supplied 150
kilos of horsemeat to Beatrice for the agreed price of £400. However he did
not include the statutory invoice recording the sale, as required by the Act
since Beatrice had told him that, as between friends, such formalities were
unnecessary. Beatrice now refuses to pay Arthur for the horsemeat.
Arthur delivered to Charles 1,000 kilos of horsemeat. The meat was
accompanied by the required statutory invoice. Charles processed the meat
and sold it as ‘organic beef burgers’. This misleads consumers who would
not otherwise eat horsemeat for ethical reasons. Charles now refuses to pay
Arthur.
Arthur delivered to Davina 20 kilos of horsemeat to be fed to her dogs. The
delivery was not accompanied by the relevant statutory invoice, the
horsemeat was tainted with bacteria and caused one of Davina’s dogs to fall
seriously ill. Davina is required to pay £200 to the veterinarian to care for the
dog.
Advise Arthur.
To what extent, if any, would your advice differ if Arthur’s registration had
expired before the above transactions were entered into, although Arthur was
unaware of this?
General remarks
This question, attempted by a good number of candidates, was concerned with
illegality. The question called for a determination of the extent to which courts will
enforce a contract despite the taint of illegality. Here the illegality is created by
statute. The initial starting point in such an answer is to consider the purpose
behind the statutory requirements. Following St John Shipping v Rank, the issue to
be considered in relation to Arthur’s dealings with Beatrice, Charles and Davina is
the purpose behind the statute. Is the statute intended to penalise conduct or to
prohibit contracts? The question also contained a variant which must be considered
– namely, what was the effect upon these transactions if Arthur’s registration had
expired?
Arthur supplied Beatrice with horsemeat and failed to provide the invoice required
by the legislation. Beatrice refused to pay him. Is the contract illegal as formed or
illegal as performed? Would the purpose of the statute be furthered by denying
Arthur the remuneration due under the agreement with Beatrice? Arthur may be
able to recover on a quantum valebat basis for the goods supplied (Mohammed v

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Alaga) but not if public policy would prevent such a restitutionary recovery (Awwad
v Geraghty & Co). However, if Arthur’s registration had expired, the contract is
illegal as formed and thus unenforceable by either party (Re Mahmoud and
Ispahani, 1921).
Arthur’s supply of horsemeat to Charles was accompanied by the invoice but
Charles used the meat for an illegal purpose. Is such a contract against public
policy and within Pearce v Brooks (1866)? Is Arthur able to recover payment for the
meat?
With regard to Arthur’s sale to Davina, Arthur has again failed to provide the
statutory invoice. Here, however, Davina will seek to sue upon the contract. The
question is, therefore, whether she (as an apparently innocent party) can maintain
the suit. Courts are generally much more sympathetic to a suit brought by an
‘innocent’ party. See, for example, Archbolds (Freightage) Ltd v Spangletts Ltd
(1961). Again, however, if Arthur’s registration has expired, the contract is illegal as
formed and thus unenforceable by either party (Re Mahmoud and Ispahani, 1921).
Common errors
An inability to discern that issues concerned with illegality were relevant to
answering this question.
A good answer to this question would…
set out the issues and apply the law with clarity to resolve the particular issues. A
very good answer would analyse the underlying practice of the courts in an attempt
to posit a rational solution to the issues posed.
Poor answers to this question…
simply set out various cases concerned with illegality upon contractual formation
without any consistent attempt to resolve the particular issues posed by the
problem.
Question 8
Miles, a famous television presenter, has decided to treat himself to a special
teeth-whitening procedure at his dentist’s surgery, Smiles Ltd. He discusses
the options with Roman, the dentist. Roman advises him that the bleaching
powders, known as Bleachit, are the most time consuming treatment, but
provide the best result. The procedure requires ten separate visits and, after
the final visit, Miles will have permanently whitened teeth. Roman warns
Miles, however, that it is only on the final treatment that Miles’ teeth will turn
white, and that during the course of treatment Miles’ teeth will be yellow. The
cost for the treatment is £3,000. Miles agrees to this procedure and pays
£2,000 immediately. The balance is due at the end of the ten treatments.
Miles undergoes the first five treatments. He finds that his teeth start to go a
very bright yellow. The day before Miles arrives at his sixth appointment, the
results of an enquiry into the cosmetic surgery industry are published. The
report reveals that the company that manufacture Bleachit have not followed
the relevant safety procedures for licensing. The UK government therefore
announce that Bleachit is to be banned from public use. Roman is rather glad
about this news as Bleachit had recently increased their prices so much that
he was operating at a loss on his clients’ treatments. He telephones Miles and
informs him that he will not be able to continue with his treatment. Miles is
furious. Unable to work with yellow teeth he is sacked from his job. He
demands a refund and compensation from Roman.
Advise Roman.

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General remarks
This question was concerned with the non-performance of the contract between
Roman and Miles and the doctrine of frustration. The first issue concerns the UK
government ban and whether this is such to frustrate the contract. Candidates
should examine the cases that are relevant to determining the scope of frustration
(eg. National Carriers Ltd v Panalpina and Davis v Fareham UDC). Relevant to the
resolution of this issue was whether other bleaching products were available to
finish the treatment or whether Bleachit was the only possible product.
If the frustration doctrine does apply in these circumstances, then candidates
needed to discuss and apply the Law Reform (Frustrated Contracts) Act 1943
s.1(2), and the relevant cases interpreting it. Section 1(3) would be applicable to
whether Roman can claim anything for the ‘valuable benefit’ conferred on Miles.
The question would be whether yellow teeth would be deemed a valuable benefit
under this section. In this regard the decision in BP Exploration (Libya) v Hunt is
relevant and should be considered and applied.
If frustration did not apply in these circumstances, candidates needed to discuss
whether Roman would be liable for breach of contract and whether Miles would
have a claim for damages.
Common errors
Common errors exhibited in attempting to answer this question was to disregard
entirely the possibility that the contract might have been frustrated.
A good answer to this question would…
address the limited scope of the doctrine of frustration and the reluctance of courts
to allow parties to escape from poor bargains.
Poor answers to this question…
copied out portions of the Law Reform (Frustrated Contracts) Act 1943.

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Examiners’ report 2013

LA1040 Elements of the law of contract – Zone B

Introduction
Many candidates answered the questions well. At times, however, some candidates
struggled. There were three common difficulties. The first was fundamental: an
inability to recognise that certain areas of law were involved in resolving the
problem. Candidates might, for example, fail to recognise that when asked to advise
party C given a contract between A and B (for the possible benefit of C) that the
primary issues involved were privity of contract and the rights of third parties.
A second difficulty was not carefully considering the facts presented in a problem
question. The resulting legal reasoning was often not directed at the given issues.
In some instances, a general discussion of a particular area of law was presented,
but without any attempt to apply this law towards the resolution of the problem
given. In other instances, candidates discussed, and attempted to apply, law which
was irrelevant to the issues raised in the particular problem.
A third was an inability to recognise the particular and specific issues involved
within a broad area of law which the candidate had recognised as relevant. At
times, this problem seemed to arise because candidates appeared to be covering
legal issues which had formed examination questions set in previous years. Some
candidates, in other words, appeared to be reproducing answers to past
examination questions. The purpose of the Examiners’ reports is to give an
indication of a method by which particular questions can be answered and some
indication of the law necessary to answer these questions. The reports are not
intended to form a base of specific knowledge which is to be recited as the answers
to future examination questions.
It is extremely important that candidates apply the law to the issues presented in a
problem. Such an answer displays not only knowledge, but also understanding of
the subject being examined. Candidates should consider the principles developed
within the relevant cases and the reasons behind these particular principles. These
must then be applied to the problem to resolve it. For many candidates, however,
their answer to a problem question resembled a ‘shopping list’ of cases. The
recitation and discussion of cases which are irrelevant to the question only
highlights a candidate’s uncertainty as to which issues are involved in the question.
In other instances, answers appeared chaotic, as if the candidate had hurried into
an answer without full consideration of the question as a whole. Candidates who
prepare a careful plan of their answer before writing it in full will find that the time
spent in making such a plan is repaid by the clarity of the final answer. Amongst
other things, this approach allows candidates to see the interaction of issues before
they have committed themselves to one course or another. It should also prevent
candidates from omitting points they had intended to discuss. Many candidates
struggled to answer essay questions thoroughly, often reciting everything they knew
about a particular subject. This shows an inability to discern the relevant from the

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irrelevant and a lack of analysis as to the underlying nature of the question.

Candidates must consider whether or not they are addressing their answer to the
question asked. A part of this answer will, necessarily, involve legal analysis.
In other instances, candidates were unable to answer the question asked and
attempted to adapt the question to a topic that they did know something about. This
results in low marks and also leaves the Examiners with the impression that the
candidates are unable to answer four questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the rest of the paper. A number of candidates
did not appear to have sufficient knowledge of contract law to attempt four
questions.
Lastly, the Examiners wish to emphasise the importance of using clear handwriting.

Specific comments on questions

Question 1
On Wednesday Frederick advertised his Nikon D800E digital camera in the
local newspaper for £2,000. George, on seeing the advertisement, called at
Frederick’s house on the same day to see the camera. After discussion,
Frederick offered to sell the camera to George for £1,500. George stated that
he would need some time to think it over but that Frederick should assume if
he heard nothing from George by Thursday evening, that George had bought
it. Frederick replied that this arrangement was fine by him.
At 3pm Hari telephoned Frederick and offered to buy Frederick’s camera for
£2,300. Frederick immediately accepted Hari’s offer and e-mailed George
revoking his original offer. Unknown to Frederick and George, there was a
problem with George’s internet service provider and the message to George
was never directed to him. Although Frederick did not know this, he was
worried about the matter and tried to telephone George again at 6pm.
Frederick spoke to Isabel, George’s wife, and told her that the camera had
been sold. Isabel said that she expected George home at 6.30pm and would
pass the message on to him then. However, George had already decided to
buy the camera and had faxed his acceptance to Frederick’s home at 5.15pm.
Frederick did not read George’s acceptance until 6.30pm. George came home
at 7.15pm and Isabel then gave him the message from Frederick.
Advise Frederick.
General remarks
The question is concerned with the formation of a contract and, in particular, which
(if any) of the various communications between Frederick and George constitute an
offer met by a binding acceptance. Candidates need to begin by considering at
what point an offer is made. The criteria established in cases such as Storer v
Manchester City Council (1974), Gibson v Manchester City Council (1979) and
Centrovincial Estates v Merchant Investors Assurance Company (1983) are
relevant to the resolution of this issue. Note that Frederick begins this process by an
advertisement, which is likely not an offer based not only on the criteria of the above
cases but also the decision and reasoning in Partridge v Crittenden (1968).
Frederick, however, then clearly states that he will sell the camera to George at a
particular price and this statement likely does satisfy the criteria set out in the cases

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mentioned above and constitutes an offer. The next issue which arises concerns
the acceptance of this offer. Is George’s statement an acceptance? The cases
establish that an acceptance must be unconditional and must ‘mirror’ the offer and
George clearly does not do this. He does, however, state that if Frederick does not
hear from him by Thursday that Frederick is to assume that George has bought the
camera. The particular issue presented here, of course, is whether there is any
communication of the acceptance. Is it possible to accept an offer through silence?
What if the offeree waives the necessity for communication? Good answers to this
question would assess the extent to which these questions are, or are not,
answered by the legal authorities. It was clear in Carlill v Carbolic Smoke Ball Co
that the requirement of communication was waived but the authority can be seen to
be distinguishable on the basis that it concerned the offer of a unilateral contract.
What if the original offer was one of a bilateral contract? In such instances a
consideration of the decision in Felthouse v Bindley is well placed.
Before the date set by George, Hari offers to buy the camera at a much higher
price. Frederick accepts this, a contract is formed between the two and Frederick
consequently purports to revoke his offer to George before an acceptance has been
communicated to Frederick by George. Revocation must be communicated to be
effective, following the criteria established in Byrne v van Tienhoven (1880). Simply
selling the camera to Hari will not suffice to revoke the offer to George. When, if at
all, has revocation been communicated? Two particular possibilities exist on the
facts provided – first by Frederick’s email to George and secondly by his telephone
call to George and Frederick’s message to Isabel. There is, in particular, no clear
authority as to when a revocation has been communicated through the medium of
an email. Is it reasonable for Frederick to attempt to communicate by email? Is it
possible to apply the reasoning of Dickinson v Dodds (1876) to such a technological
method? Frederick makes a further attempt to revoke the offer by speaking to
Isabel – has she the authority to receive such a communication? If there has been
an effective revocation, was George’s acceptance communicated before any
revocation? Finally, George faxes the acceptance to Frederick – at what point is this
acceptance effective? If the offer has been successfully revoked, the acceptance
cannot be good but if the offer has not been revoked, when is George’s acceptance
effective? Good answers would consider the reasoning in cases such as Entores v
Miles Far East Corp (1955) and Brinkibon Ltd v Stahag Stahl (1982).
Common errors
Reciting as many case names as possible without any attempt to analyse the cases
and apply the criteria to the facts presented in the problem. This was particularly
unfortunate where the cases recited were in no way relevant to answering the
particular issues raised in these facts.
A good answer to this question would…
analyse the facts provided, isolate the relevant legal issues presented by these
facts and then apply the relevant law to resolve these issues. Very good answers
would take a critical view of the various rules presented by the cases concerned
with offer and acceptance in order to reach a more principled result in this case.
Poor answers to this question…
displayed an inability, or a reluctance, to identify and isolate the relevant issues
presented by the facts given.
Student extract
This extract is taken from a very good attempt at answering the question. The
candidate began by indicating that the problem gave rise to issues concerned with
contractual formation and whether or not Frederick had a contract with either
George or Hari in the circumstances given. The candidate then proceeded to

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LA1040 Elements of the law of contract

consider each issue individually. As indicated above, one of the particular issues
presented by the facts in this case is the legal effect of George’s discussion with
Frederick. In response to Frederick’s offer to sell the camera to George for £1,500.
‘George stated that he would need some time to think it over but that Frederick
should assume if he heard nothing from George by Thursday evening, that George
had bought it.’ The legal issue which arises from this is whether or not an
acceptance can be made by silence.
In considering the effect of the discussion, the candidate considered the matter in
the following manner:
Frederick then offers to sell to George for £1,500. This counter-offer, or a
change of offer to be more specific, kills the original offer of £2,000. It seems
this is more like an offer than an invitation to treat as Frederick is intended
[sic] to be bound upon George’s acceptance to sell the camera at £1,500
(Storer v Manchester CC).
In the conversation, George stated that Frederick should assume if he heard
nothing from George by Thursday evening that George had bought it. George
has suggested an acceptance method by silence which is accepted by
Frederick. Nonetheless, the law seems not to have agreed that acceptance
can be made by silence (Felthouse v Bindley). There are, nonetheless, some
precedents in obiter, suggesting that if this acceptance method is agreed by
both parties, silence can be a method of acceptance. (Re Selectmove). Rust
v Abbey Life Assurance (1979) even suggests that acceptance by silence
can be viewed as an acceptance by conduct if both parties agreed . Yet at
the end of the day, it seems that Felthouse v Bindley is still the rule –
acceptance by silence is not allowed. Up till this point, no contract is made.
Comment on extract
The precision of this extract exemplifies the reasons that the Examiners gave this
answer as a whole a first. The answer is well structured and logical in its approach.
In considering this particular issue – acceptance by silence – the candidate sets the
issue in the context in which it has arisen. The candidate sets out the law both for
and against allowing an acceptance by silence. An even stronger answer would
consider why the law is adverse to allowing an acceptance by silence as a matter of
principle. The law is applied to the facts given. A conclusion is then reached on the
particular issue before the candidate proceeds to consider the next issue.
Question 2
Harold is planning a number of celebrations for the fortieth birthday of his
partner, Percy. He intends to hold a firework party in the garden of their
stately home on the eve of Percy’s birthday. Harold wants to prevent the
fireworks from landing on the roof of their property, since it dates from the
14th century and would be difficult to repair if it got damaged. He therefore
telephones his friend, Sam, the fire chief at the local fire station, and tells him
that he will pay him £1,000 if he attends on the night of the party with three
fire fighters. Sam agrees. It is a requirement under local regulations that at
least two firefighters attend firework events.
Harold needs to redecorate the ten bedrooms of his house so that his guests
can stay in comfort during the party period. He contacts his cousin,
Gloucester, who is a painter and decorator, and asks him to undertake the
work. Gloucester charges Harold £3,000. After completing only one bedroom,
Gloucester is offered another job at a higher wage and informs Harold that he
will not complete the job. Harold is desperate to get the painting finished in

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time for the party and offers to pay Gloucester an additional £1,500 if he
completes it. Gloucester agrees and completes the work.
Harold telephones Birthday Banquets to arrange the food for the party.
Birthday Banquets agree to provide a hot buffet for 300 people on Percy’s
birthday. Harold agrees to pay them £800. However, a week before the party,
all the chefs at Birthday Banquets get sick. On learning of this, Harold tells
Birthday Banquets that if they can find another reliable company to prepare
the buffet that would be great. Birthday Banquets contact Fantastic Foods,
who agree to provide the buffet instead.
After the party, Harold refuses to pay Sam the £1,000 and tells Gloucester he
will only pay him the £3,000. On receiving an invoice from Fantastic Foods, he
also refuses to pay them any money.
Advise Harold.
General remarks
The question is concerned with issues of contractual formation, primarily
consideration but also with an intention to create legal relations.
The question is comprised of three parts. The first part asks candidates to discuss
the law relating to consideration and whether consideration has been given for the
promise to perform a pre-existing public duty. In this particular case though, Sam is
providing more firefighters than the two firefighters required by the local regulations.
Candidates needed to consider and apply the criteria in Glasbrook Bros Ltd v
Glamorgan CC (1925) to establish whether or not there was consideration because
Sam had gone beyond the public duty required as a result of the local regulations.
The second part of the question called for examination of the doctrine of intention to
create legal relations. Harold and Gloucester are cousins – does this relationship
mean that there is no intention to create legal relations? On balance, the better view
is that an application of the relevant cases to these facts establishes that there is an
intention to create legal relations. A related difficulty, though, is whether or not
consideration has been given for the variation of the contract. Candidates needed to
discuss whether Harold received a practical benefit that might constitute
consideration within Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) and
cases decided subsequent to this decision (notably Re Selectmove (1995) and
South Caribbean Trading Ltd (‘SCT’) v Trafigura Beeher BV (2004)). A particular
problem in considering whether or not such a practical benefit existed in this case is
that the considerations may not apply because Gloucester’s actions constitute
economic duress. The presence of economic duress makes it difficult, if not
impossible, to establish a practical benefit, although a very good answer would
consider and apply the decision in Adam Opel GmbH, Renault S.A. v Mitras
Automotive (UK) Limited (2007).
The third part of this question is concerned with Harold’s potential liability to
Fantastic Foods. Has Harold a separate contract with them? Could Fantastic Foods
enforce the promise Harold made to Birthday Banquets under the Contacts (Rights
of Third Parties) Act 1999? It may be difficult to argue that the contract ‘purports to
confer a benefit’ under s.1(b) and that Fantastic Foods are ‘expressly identified’ in
the contract with Birthday Banquets. Very good attempts to answer the question
considered whether Fantastic Foods had an implied contract with Harold to provide
the food or whether or not Birthday Banquets was able to enforce the contract on
behalf of Fantastic Foods.
Common errors
Correctly identifying the issues presented in the first part of the problem but then
coming to the conclusion that the second part of the problem, dealing with

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LA1040 Elements of the law of contract

Gloucester, was concerned with the application of the principle in High Trees
House. Another error exhibited by some candidates was not to advise Fantastic
Foods but to advise Birthday Banquets in relation to the third part of the question.
A good answer to this question would…
isolate the relevant issues from the facts given and resolve these issues through an
application of the criteria in the case law to resolve these issues. A very good
answer would examine the underlying conceptual links between the different
contractual doctrines presented by these facts and discuss these links in relation to
the facts given.
Poor answers to this question…
arose when some candidates were concerned to apply exclusively Williams v
Roffey Bros (or sometimes Stilk v Myrick) to all three parts of this problem. Such an
approach indicated a lack of understanding of the law in this area.
Question 3
Wendy is arranging a party for her daughter, Violet’s, 5th birthday. Wendy is
anxious that Violet’s birthday party is a success. She is hoping to start her
own business as a childrens’ party organiser and believes a successful party
will attract business from many of the parents at her daughter’s party.
Wendy visits Pirate Playhouse, a local children’s play centre, in order to
enquire if she can hire it as a venue for the party. She meets Kamil, an
employee, who tells her that the play centre is the best in the neighbourhood
with a wide range of facilities. He reassures her that the party will be a great
success. He says, ‘The children will be talking about it for months!’ Kamil
suggests that he show Wendy all the facilities available at the play centre, but
Wendy refuses as she is late for a hairdressing appointment. Wendy notices
that the play centre is offering a discount if she books that day. She therefore
decides not to delay and books Pirate Playhouse for Violet’s party. As she is
leaving, Wendy asks Kamil whether Pirate Playhouse can accommodate 100
children. Kamil has only just started working at the play centre and is not
sure of its capacity. He consults his ‘Employee Handbook’ and reads: ‘the
play centre should not allow entrance to more than 200 children.’ Kamil
informs Wendy that there is more than enough room for 100 children.
On the day of the party, things do not go to plan. Pirate Playhouse is
extremely basic with very few play facilities. The children get extremely bored
and complain to their parents. In addition, unbeknown to Kamil, the Employee
Handbook is out of date and since its publication Pirate Playhouse has sold
off half of its estate, thereby reducing its capacity considerably. The Pirate
Playhouse can now only hold 80 children and many of Violet’s friends cannot
enter the Playhouse. The result is disastrous. As a result, Wendy believes that
her chances of attracting potential customers for her new business have been
ruined. It can only accommodate a maximum of 80 children and many of
Violet’s friends are prevented from entering. Wendy believes that the
disastrous party has ruined her chances of attracting potential customers for
her new business.
Advise Wendy.
General remarks
This question asked candidates to consider and apply the law relating to
misrepresentation. The problem is best dealt with by considering each issue in turn.
The first issue raised is whether Kamil’s statements were warranties or
representations. Candidates needed to consider and apply the criteria in the

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relevant cases (such as Heilbut, Symons & Co v Buckleton (1913), Oscar Chess
Ltd v Williams (1967), and Esso Petroleum Co Ltd v Mardon (1976)). In this
instance, it seems most likely that the statements are not warranties but are instead
representations or puff. Three particular statements of Kamil’s are at issue. The first
is that the play centre is the best in the neighbourhood with a wide range of
facilities. The second is that the children will talk about it for months. The third
concerns the number of children the play facility can accommodate. Good attempts
to answer this question noted the ambiguity of when this last statement was made
in relation to whether it occurred before or after Wendy had placed her booking.
Particular points to be considered are: whether or not the statements were a mere
puff or opinion (and, if the latter, whether or not actionable); whether or not the
statements induced Wendy to contract with Pirate Playhouse; and whether or not it
matters that Wendy could have verified matters by looking around the Pirate
Playhouse herself but declined to do so.
In the event that the requirements of an actionable misrepresentation can be met,
candidates needed to then consider the remedies available to Wendy. This, in turn,
required a consideration of the various types of misrepresentation and which could
be successfully claimed by Wendy. Good answers would then focus on the
advantages to her in pursuing an action under s.2(1) of the Misrepresentation Act
1967. In this respect, an action under s.2(1) is particularly advantageous to Wendy
because of the difficulty Kamil would have in establishing that he had a reasonable
belief his statement was true. This is particularly apparent when the interpretation of
s.2(1) of the 1967 Act made by the court in Howard Marine & Dredging v Ogden is
analysed and applied.
Candidates should also discuss damages under s.2(1) of the Act and whether or
not the decision in Royscot v Rogerson would allow recovery of ‘loss of opportunity’
damages with regard to Wendy’s potential business as a children’s party organiser.
Common errors
Not considering whether the statements were actionable as misrepresentations and
simply discussing various types of misrepresentation. Another error exhibited by
some candidates was to conclude that an actionable misrepresentation had been
made by Kamil but to then assess the damages payable on a contractual basis
rather than a tortious basis.
A good answer to this question would…
isolate the relevant issues from the facts provided, address these issues in turn and
recommend that Wendy bring an action under s.2(1) of the 1967 Act.
Poor answers to this question…
Poor answers to this question took one of two general forms. The first was to
wrongly identify the issues presented by the facts. This is not, for example, a
question concerned with the Sale of Goods Act 1979 because no good is sold. The
second were those in which the candidate set out everything they knew about
misrepresentation with little attempt to apply the knowledge to resolve the issues
which arose from this particular problem.

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LA1040 Elements of the law of contract

Question 4
‘If the law of contract is to be coherent and rescued from its present
unsatisfactory and unprincipled state, the House has to make a choice: either
to uphold the approach adopted in Cundy v Lindsay and overrule the
decisions in Phillips v Brooks Ltd and Lewis v Averay, or to prefer these later
decisions to Cundy v Lindsay.’ [Shogun Finance Ltd v Hudson (2003) per
Lord Nicholls]
Discuss.
General remarks
This question required candidates to critically consider the law surrounding mistake
of identity and the differing results and deliberations of this situation made by
various courts since Cundy v Lindsay. Cundy v Lindsay itself makes no mention of
a doctrine of mistake of identity and was said at the time to be based on the
decision in Hardman v Booth. Later cases, however, seemed to find that a mistake
as to identity renders the contract void, with the result that the innocent third party
purchaser acquired no title to the good that they bought from a rogue. In some
instances, however, this was not the case. In King’s Norton Metal v Edridge the
contract was found to be voidable, as it was in Phillips v Brooks. It was suggested in
relation to the latter case that because the contract was formed inter praesentes, or
face to face, that the contract was voidable since a presumption arose that the
owner intended to contract with the person before them, in contrast to the situation
in Cundy v Lindsay, where the contract was formed by correspondence between
parties dealing with each at a distance. The difficulties of these two approaches can
be seen in the contrasting decisions in Lewis v Avery and Ingram v Little. The
question allowed candidates to examine carefully the judgments in Shogun Finance
v Hudson and discuss the ways in which the law is unsatisfactory (e.g. it is
impossible to establish with certainty when the third party purchaser will own a good
or when they will not) and unsatisfactory (e.g. why does the face to face
presumption arise?). Note that candidates should attempt to answer the question
set rather than to produce a general discussion on the law of mistake
Common errors
Focusing upon one question concerned with mistake of identity to the exclusion of
all others.
A good answer to this question would…
set Shogun Finance v Hudson in the development of the law of mistake of identity in
English law. A very good answer would not only consider the ways in which this
development was unsatisfactory and unprincipled but also make an attempt to
recommend which course the law should follow in the future and why it should
follow such a course.
Poor answers to this question…
tended to set out case after case by means of a factual description with little attempt
to analyse what each case established, how it established what it did and the
relationship between the cases.
Student extract
The extract set out here represents the beginning of the candidate’s attempt to
answer the question:
In Shogun Finance v Hudson, the case was that a person pretending to be
another, purchased a vehicle under hire purchase, and due to the terms of
the hire purchase, they became the legal owner of the vehicle.

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The approach in Cundy v Lindsay was that when a buyer takes a bona fide
interest in the said goods without knowing that the seller of said goods did not
have the good title to them, the title to these goods would pass to the
innocent party.
In Phillips v Brooks, however, the case was approached differently, as the
imposter appeared and produced a cheque of considerable value and wished
to purchase jewelry with the money.
Comment on extract
This extract demonstrates many of the aspects which made this answer weak.
There is no introduction to either the difficulties established by these cases or how
the cases relate to each other beyond factual differences. The analysis of what
each case establishes is, at best, weak and, at worse, erroneous. It is not true, for
example, that the rogue in Shogun Finance v Hudson became the legal owner of
the vehicle. Had he become the legal owner of the vehicle, Shogun Finance would
have had no case because the rogue would clearly have had a title to pass to
Hudson. The description of Cundy v Lindsay is incomplete for it does not explain
why the third party could acquire title from a vendor who did not themselves have
title. In any event, in Cundy v Lindsay itself the decision was that the third party
could acquire no title since there had never been any form of contract with the
rogue Blenkarn. The analysis of the decision in Phillips v Brooks is similarly flawed
– the point of distinction taken in the case and by later commentators was that the
parties dealt face to face – not that a cheque of considerable value was produced.
Question 5
‘The rule that a third party cannot acquire rights under a contract to which he
is not a party is a controversial one and courts created numerous exceptions
to this rule. The use of such exceptions, and the development of new
exceptions, will diminish following the enactment of the Contracts (Rights of
Third Parties) Act 1999.’
Discuss.
General remarks
This question required candidates to consider the doctrine of privity and the means
by which its effects can be avoided. Candidates needed to consider both how privity
(and, really, the related rules concerned with damages) could be circumvented at
common law and the nature of the rights which can be conferred under the
Contracts (Rights of Third Parties) Act 1999. There have been sufficient cases
decided pursuant to the 1999 Act that it was desirable for candidates to
knowledgeably discuss these cases. The essential element of an attempt to answer
this question was a consideration of whether or not the 1999 Act removed the
impetus for the further development of the common law in relation to exceptions to
privity of contract.
Common errors
Setting out everything candidates could remember about privity of contract without
considering the title which had been set.
A good answer to this question would…
note that many of the common law exceptions were founded upon the intention of
the parties. Now that these intentions can be realised through the employment of
the 1999 Act what incentive will there be for further common law developments to
occur?
Poor answers to this question…
merely provided a general discussion of the law of privity.

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LA1040 Elements of the law of contract

Question 6
Khan is the owner of a small flat. He has been posted abroad for two years
and wants to rent out his flat. He visits Houzz, a local home rental agency,
and discusses his situation with Miranda, the owner. Khan agrees with
Miranda that she will find tenants for his flat and ensure that the property
remains safe during the period of his absence. It is also agreed that any rent
received from the property will be paid directly to the bank which holds the
mortgage on the property, to satisfy Khan’s mortgage payments. Miranda
asks Khan for a £200 cheque and informs him that this represents the first
two months’ commission for Houzz’s services at £100 per month. Khan also
supplies Miranda with his bank details so that they can arrange for monthly
payments direct from his bank account to cover Houzz’s services. Miranda
gives Khan a glossy brochure entitled ‘Welcome to Houzz’ and tells him that
he will find everything he needs within.
Six months later, Khan notices that he has very little money in his bank
account. He investigates and realises that Houzz have been increasing their
monthly fees considerably. His latest monthly payment was £900. That same
day, Khan receives an email from Miranda informing him that Peter, her
cousin, was helping her out with the business last weekend. Unfortunately,
when he visited Khan’s property he didn’t lock the door. As a result, a burglar
entered and stole Khan’s audiovisual equipment worth £3,000.
Khan is furious and telephones Miranda. Miranda informs Khan that she will
be terminating his contract in seven days and that he must consult the
brochure she sent. Khan does so and finds the following terms and
conditions:
1. The commission charges for managing your property are variable and
may fluctuate depending on a number of factors including such things
as the value of your home, the time period of rental, the Bank of
England interest rate and average commission charges of competing
home rental agencies in a 4.5 kilometre radius from Houzz.
2. Houzz are not liable for any loss or damage caused by the negligence
of their employees.
3. Houzz reserve the right to terminate the contract with the provision of
one week’s notice. Houzz’ clients must provide six month’s notice for
termination of the contract.
Advise Khan.
General remarks
This question asked candidates to discuss the law relating to terms. Three general
issues are presented: first, whether the terms have been incorporated into the
contract; second, whether the terms are applicable to the circumstances that have
arisen; and third, the statutory regulation of the terms.
The first issue is whether the terms have been incorporated. Candidates needed to
discuss the rules and case law relating to incorporation by reasonable notice. Of
particular relevance is whether it was clear that the brochure was a contractual
document and, even if it was, whether it was given before or at the time of
contractual formation.
Candidates then needed to discuss whether the terms – properly interpreted –
cover the liability that has arisen.

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If this can be established, then the statutory controls needed to be examined and
applied. In relation to the increased commission taken from Khan’s bank account,
candidates should consider whether clause 1 falls within reg.6(2) of the Unfair
Terms in Consumer Contracts Regulations (UTCCR). Is it in plain and intelligible
English? If so, might it be considered a core term according to case law (e.g. OFT v
Abbey; DG v First National Bank) and therefore outside the scope of the UTCCR?
In relation to loss of audiovisual equipment, if clause 2 does cover this liability (is
Peter an employee; is this negligence?) then candidates needed to discuss whether
this clause would be deemed reasonable under the Unfair Contract Terms Act 1977
(UCTA) or fair under the UTCCR.
In relation to Miranda’s notice of one week, candidates should discuss whether it
would be deemed unfair under the UTCCR or reasonable under UCTA.
Common errors
Applying the Sale of Goods Act 1979 to the problem. The Sale of Goods Act 1979
cannot apply as no good is sold in this problem. Such an attempt indicates a lack of
understanding.
A good answer to this question would…
consider the legislation carefully and apply it with reference to the cases which
interpreted the relevant portions of the legislation.
Poor answers to this question…
focused solely upon the issue of whether or not the terms had been incorporated
into the contract and ignored the regulation of the terms so incorporated.
Question 7
Adam was a supplier of fireworks who was registered as required by the
(fictitious) Firework Supply and Distribution Act 2003. Adam supplied 150
boxes of fireworks to Bernadette, without the statutory invoice recording the
sale, as required by the Act. However, he did not include the statutory invoice
recording the sale, as required by the Act, since Bernadette told him that, as
between friends, such formalities were unnecessary. Bernadette now refuses
to pay Adam for the fireworks.
Adam delivered to Charlotte 100 boxes of fireworks. The boxes were
accompanied by the required statutory invoice. Charlotte used the fireworks
to celebrate events at her brothel. Charlotte now refuses to pay Adam for the
fireworks.
Adam delivered to Dana 20 boxes of fireworks to be used at a private party at
her house. Although the delivery was accompanied by the relevant statutory
invoice, the fireworks were poorly assembled and caused damage to Dana’s
house. Dana is required to pay £2,000 to fix the damage caused.
Advise Adam.
To what extent, if any, would your advice differ if Adam’s registration had
expired before the above transactions were entered into, although Adam was
unaware of this?
General remarks
This question is concerned with illegality. The question calls for a determination of
the extent to which courts will enforce a contract despite the taint of illegality. Here
the illegality is created by statute. The initial starting point in such an answer is to
consider the purpose behind the statutory requirements. Following St John Shipping
v Rank, the issue to be considered in relation to Adam’s dealings with Bernadette,

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LA1040 Elements of the law of contract

Charlotte and Dana is the purpose behind the statute. Is the statute intended to
penalise conduct or to prohibit contracts? The question also contains a variant
which must be considered: what is the effect upon these transactions if Adam’s
registration had expired?
Adam supplies Bernadette with fireworks and has failed to provide the invoice
required by the legislation. Bernadette refuses to pay him. Is the contract illegal as
formed or illegal as performed? Would the purpose of the statute be furthered by
denying Adam the remuneration due under the agreement with Bernadette? Adam
may be able to recover on a quantum valebat basis for the goods supplied
(Mohammed v Alaga) but not if public policy would prevent such a restitutionary
recovery (Awwad v Geraghty & Co). However, if Adam’s registration has expired,
the contract is illegal as formed and thus unenforceable by either party (Re
Mahmoud and Ispahani, 1921).
Adam’s delivery of fireworks to Charlotte is accompanied by the invoice but she
uses the fireworks for an illegal purpose. Is such a contract against public policy
and within Pearce v Brooks (1866)? Would Pearce v Brooks be followed by a
modern court? Can Adam recover payment for the fireworks?
With regard to Adam’s sale to Dana, Dana will seek to sue upon the contract. The
question is, therefore, whether she (as an apparently innocent party) can maintain
the suit. Because the sale was accompanied by the relevant statutory invoice, the
sale is a valid one and Adam’s supply of poorly assembled fireworks is a breach of
contract. If, however, Adam’s registration has expired, the contract is illegal as
formed and thus unenforceable by either party (Re Mahmoud and Ispahani, 1921).
Common errors
Failing to acknowledge that the relevant issue presented in all three instances was
one of illegality.
A good answer to this question would…
set out the issues and apply the law with clarity to resolve the particular issues. A
very good answer would analyse the underlying practice of the courts in an attempt
to posit a rational solution to the issues posed.
Poor answers to this question…
simply set out various cases concerned with illegality upon contractual formation
without any consistent attempt to resolve the particular issues posed by the
problem.
Question 8
Boris Buses are planning a new business venture in London. They want to
operate a tourist bus service around the main tourist attractions of central
London. In addition to the sightseeing experience, passengers will be able to
dine at the gourmet restaurant that will be on every bus. Boris Buses are
expecting to make most of their money from restaurant diners, rather than
from the ticket sales for the tourist bus route.
Boris Buses contact Ken, a supplier of red double-decker buses, and arrange
to buy 30 buses from him at a cost of £6,000,000. £4,000,000 is payable
immediately and the balance is due on delivery of all the buses. Boris Buses
also contract with Cameron, who will equip the buses with compact kitchens
on their top decks. Boris Buses agree to pay £1,000,000, the total of which is
payable immediately. Cameron orders the kitchen equipment in advance at a
cost of £150,000 and starts building the kitchens.

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One day after Boris Buses have received all of their buses from Ken, the
Mayor of London introduces, with immediate effect, regulations on public
transport emissions. Environmental regulation had been a key element of the
Mayor’s recent election manifesto. All public transport that does not meet the
required level of nitrogen oxide emissions is banned from entering the central
London zone. The prohibition starts immediately. Boris Buses’ new buses do
not meet the nitrogen oxide requirements as set out in the regulation. Boris
Buses are therefore unable to follow their planned tourist route and are
instead restricted to an outer London route that offers no tourist attractions.
Boris Buses are furious. They wish to cancel their contracts with Cameron
and Ken. Both refuse and demand that Boris Buses pay them what they owe.
Advise Boris Buses.
General remarks
The question is concerned with the non-performance of the contracts between Boris
Buses and Ken, on the one hand, and Cameron, on the other, and how the
particular contracts are discharged. Does discharge occur automatically by
frustration or through breach?
Candidates needed to discuss whether the Mayor of London’s regulation over
nitrogen oxide emissions is such to frustrate the contract between Boris and Ken. In
this respect, candidates needed to examine the cases relevant to the determination
of the scope of frustration (e.g. National Carriers Ltd v Panalpina, Davis v
Farehama; and Herne Bay Steamship v Hutton). Relevant to this issue is whether
the event is foreseeable or not (the regulation was within the Mayor’s recent
election manifesto) and the fact that the buses could still follow an alternative route
(albeit not within central London) and still offer the restaurant service. If the buses
have been delivered and the contract complete when the Mayor introduces the new
regulation, can the contract be frustrated? Is this situation analogous with that of the
failed coronation procession in Krell v Henry? If the contract is not frustrated, has it
been breached?
If frustration operates in this instance, then candidates needed to discuss and apply
the Law Reform (Frustrated Contracts) Act 1943 and the cases which interpret it.
Section 1(2) would apply to allow Boris to recover any sums paid and to retain the
balance. However, the court would need to exercise its discretion under the same
provision to determine whether or not to make an award.
Has the contract with Cameron been frustrated? It is not clear when the compact
kitchens are to be installed on the top decks of the buses. In addition, the same
issues arise in relation to the limited scope of frustration – does it apply to a
changed route for the buses? Does Boris’s purpose for having the kitchens installed
form the basis of the contract with Cameron? In the event that the contract has
been frustrated, questions as to the restitutionary results arise. Particularly relevant
is whether Cameron can offset any of his expenses from the £1,000,000 that Boris
paid upfront. In this respect, s.1(2) and the case law that interprets it (e.g. Gamerco
v ICM Fair Warning) is relevant. There may also be a claim under s.1(3) for
valuable benefit (as interpreted by BP v Hunt) since Cameron has already
constructed some of the kitchens.
Common errors
Disregarding entirely the possibility that the contract might have been frustrated.
A good answer to this question would…
A good answer to this question isolated the relevant issues and applied the case
law and legislation to resolve these issues in an attempt to indicate the likely
outcome a court would reach in this instance.

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LA1040 Elements of the law of contract

Poor answers to this question…

Poor attempts to answer this question focused on the question of whether or not the
contract had been frustrated and, having decided that it had been, did not then
consider the application of the Law Reform (Frustrated Contracts) Act 1943.

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Examiners’ report 2014

LA1040 Elements of the law of contract – Zone A

Introduction
General examination advice is to ensure that you read the examination questions
carefully and decide the topic which is being examined and which questions you
want to tackle. The questions are set out to allow you to demonstrate your
knowledge and understanding in relation to specific issues. Although there may be
some overlap there are no two questions on the same topic. There are no trick
questions, so ask yourself ‘why have the Examiners told me this, what legal issues
are raised on these facts?’
There were some very good answers in this examination, which had a good grasp
of the relevant case law and legislation. In problem questions good answers directly
applied this knowledge to the facts presented. In essays they built critically on this
knowledge and answered the actual question posed.
There are certain errors which occur in most examination sittings. One is a failure to
identify the correct area of law; this may arise from a failure to actually read the
rubric and identify who is being advised (see specific comments below). Also, some
candidates answer two questions on the same topic. It is highly unlikely that this is
being asked for, as explained above, so read the questions carefully to see the
clues that there are in the question to help focus the answer. If the subject guide
has been followed and the activities undertaken this should help you identify the
facts which raise certain legal issues, and then the appropriate response.
Another problem is failure to use relevant authority to support arguments. There
remain some answers which have no authority at all; these cannot gain credit for
the required knowledge which needs to be evidenced in the answers. Some
candidates who use no cases but say ‘there is a decided case’ will also gain little
credit, in a common law system there will be cases on most issues covered so this
is not showing knowledge of cases.
Additionally, there are candidates who write all they know on a particular area,
whether relevant to the question or not, then ‘apply the law’ in a short paragraph.
This is not the correct style. This style leads to repetition, which is time consuming
and will mean there is time pressure to fully answer the question, and an inability to
show understanding of the relevant law by applying it to the given facts. There were
a large number of answers which had a long introduction setting out the issues to
be discussed, which was little more than a repetition of the key facts, followed by a
‘statement of law’ which was either an essay or list of all the issues which are
related to the subject, whether relevant or not, then ‘application to facts’ where the
candidate concluded if there was an issue or not. This style does not allow you to
show which part of the law you set out is relevant to your conclusion. You must
apply the law to the facts supported by the relevant law. Remember you are asked
to advise a person on the given facts. So being selective of the relevant law to their
facts is essential.

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LA1040 Elements of the law of contract

A logical answer will also show that you have planned your answer based on the
relevant facts and thought logically about the demands of the facts. In problem
questions advise each party separately to help in keeping their answer logical (see
specific advice). In essays remember to formulate an answer that actually
addresses the question posed. There is still a tendency to write the answer to the
question candidates wish they had been asked or a prepared answer to a question
which has appeared in the past. This will gain little credit, if any, as the essay
requires a critical approach to the issue based on the question posed.
There were also some candidates who did not plan their time, answering three
questions well with a weak, or sometimes non-existent, fourth answer. This means
that there are immediately 25 per cent of potential marks lost. In an age of
electronic writing it may help you to practice writing timed answers in long hand.
This will pay dividends in the final examinations.

Specific comments on questions

Question 1
On 1st May Aga decides to sell her collection of pots. She places an advert in
the local paper, ‘Beautiful Arden pot for Sale. £500 or nearest offer.’ She
includes her telephone number, email address and postal address on the
advert. On 2nd May Beatrice emails Aga saying, ‘I will buy the pot for £450.’
Aga replies saying, ‘I will take £475 but please let me know by 5pm today as
another customer is calling to see the pot tomorrow.’ Beatrice immediately
emails back asking if Aga will accept payment by cheque. By 4.30pm she has
not heard from Aga so sends a further email to say she will buy the pot for
£475. Aga’s internet connection is lost that afternoon and Aga does not get
this email until it is reconnected on 5th May. On 3rd May Chad calls Aga and
says he will buy the pot for £400 but Aga says she would not take less than
£475. Chad says he will think about this. Later that day Chad writes to Aga
saying he will pay £475 but the letter is misaddressed and never arrives. On
4th May Aga sells the pot to Didier for £500. Didier, a friend of Beatrice, meets
her on 5th May and tells her of his luck in getting the pot. Beatrice is upset as
the pot would complete her Arden Collection.
Advise Aga.
General remarks
This question was related to agreement: it would be useful for candidates to take
each party and deal with their issues chronologically.
First, discuss the nature of the advert, offer or invitation to treat (ITT) with relevant
case law to explain the principles. It is likely that this is an ITT. Some candidates
also concluded that this was not an offer as it was a bi-lateral advertisement; the
advertisement was not a bi-lateral situation as it was made to the world in general.
The next logical stage was to consider the nature of Beatrice’s (B) communication,
as the advert is likely to be an ITT it is B who makes an offer. Some candidates
concluded this was a counter offer, which is illogical as a counter offer requires an
original offer to counter. It is Aga (A) who makes a counter offer, which should be
explained with reference to relevant case law. This offer will end at 5pm that day,
when it will lapse. Candidates may explain that there is no obligation to keep the
offer open until this time, with reference to relevant case law.

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B’s email following A’s offer could be a request for information, which appears most
likely, so the offer is still open. If there is a counter offer, then this ends A’s offer
which cannot be accepted by later email. This should be explained with reference to
relevant case law. If the email was a request for information then B has later sent
acceptance, but not communicated this until 5th May. There should have been
discussion with the relevant law whether this communication was effective. If the
communication was not effective, then when B meets Didier (D) who says he has
purchased the pot, does this mean the offer is revoked? Is Didier reliable? Good
answers noted that this was not necessary as the offer would have lapsed earlier so
there was no need to revoke.
Chad’s (C’s) call would be an offer, which follows logically from the earlier
conclusion that the advert was an ITT, then there is a counter offer by A. Then C
sends a letter which seems to be an acceptance. This must be communicated, but it
is misaddressed so is not communicated. There should be a discussion of the
postal rule with relevant case law. The offer would remain open until it was revoked
or lapsed on a reasonable passage of time.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases which are relevant.
Smith v Hughes (1871) LR 6 QB 597; Partridge v Crittenden [1968] 1 WLR 1204;
Hyde v Wrench (1840) 3 Beav 334; Entores v Miles Far East Corp [1955] 2 QB 327;
Thomas v BPE Solicitors [2010] EWHC 306; Brinkibon v Stahag Stahl [1983] 2 AC
34; Adams v Lindsell (1818) 1 B & Ald 681; Korbetis v Transgrain Shipping [2005]
EWHC 1345 (QB); Dickinson v Dodds (1876) 2 Ch D 463; Routeledge v Grant
(1828) 4 Bing 653.
Common errors
Considering the advert as an offer, which is unlikely on authority. Giving a long
detailed discussion of the facts of cases that were irrelevant to the facts in the
question. Failing to plan the answer to ensure that all the issues were considered
fully. Very few candidates considered the offer to B as lapsing at 5pm.
A good answer to this question would…
Deal with the parties logically and consistently, using case law consistently to
support their argument. The best answers dealt with the majority of the issues
identified above and had a good range of cases to support their points.
Poor answers to this question…
Failed to discuss the issues logically and the relevant communication issues. For
example, discussing the postal rules in relation to B and A when there was no issue
of post in their communication. Failed to use case law or were overly descriptive of
the cases in this area without applying the principles (ratio and obiter) to the
relevant facts.
Student extract
This area of law is under postal rule. Offer is complete when it accepted.
Aga made an offer which was accepted by beatrice. Beatrice wanted to
create a counter. Counter offer cancels the original price. Aga made a right
decision of selling the post to didier. Didier offered Aga the original price of
the pot that was £500. If Aga had accepted beatrice offer she wouldn’t had
get the £500
Comment on extract
This is the opening paragraph of an answer. Although it is good to begin by setting
out the area of law there is a basic error as to the area covered, which is

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agreement, the postal rule being merely an element in this area of law. The third
sentence is probably correct on the facts, but because there is no application of the
facts here it is unclear if the candidate believes that the advert is an offer, which is
unlikely, or that the response to Beatrice’s email of 2nd May offering £450 is an
offer. This may illustrate how important it is to apply the law to the facts.
The sentence ‘Beatrice wanted to create a counter offer’ suggests that the
candidate thinks the advertisement was an offer, as you cannot counter offer an
invitation to treat. Some candidates concluded that the advert was an invitation to
treat then argued, illogically, that Beatrice’s email of 2nd May offering £450 was a
counter offer. There was no offer to counter. This shows a lack of planning and
thought about the law in this area. The last part of the extract is a general comment
that Aga has managed to get more money for the pot, but this is not relevant to the
legal situation. There is also no authority in this answer, despite mentioning key
legal issues such as offer, counter offer and postal rule.
Question 2
‘The Contract (Rights of Third Parties) Act 1999 is a success in theory but a
failure in practice.’
Discuss.
General remarks
This question required an understanding of the Act and the relevant case law which
has used the Act. You could compare this to the previous rules and perhaps
consider how the decisions would have changed had the Act been in force.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Contract (Rights of Third Parties) Act 1999; Tweddle v Atkinson (1861) 1 B & S 393;
The Eurymedon [1975] AC 154; Darlington v Wiltshier Northern [1995] 1 WLR 68;
Dolphin Maritime v Sveriges [2009] EWHC 716; Nisshin Shipping v Cleaves [2003]
EWHC 2602; Law Commission Report 1996.
Common errors
Many candidates just listed the Act and gave a general summary of its provisions or
just listed the common law and sometimes statutory exceptions that were used
before the Act without any attempt to address the question posed. This often gave
the indication that an answer to a ‘privity essay’ had been pre-learned and was
going to be given no matter what the question.
A good answer to this question would…
Good answers referred to cases which had been decided in relation to the Act and
focused on how successful or unsuccessful they were in matching the theory which
underpins the Act and its practice. Some candidates also usefully compared the
previous common law decisions and how they would be different under the Act.
Poor answers to this question…
Presented a pre-prepared answer to an essay in this area and failed to apply the
knowledge in that answer to actually answer the question posed. Some answers
merely described the Act and previous or current law and failed to be critical of the
authority as required in essays.

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Question 3
Bob, a specialist toy seller, wishes to maximise his toy sales during the busy
Christmas period and therefore decides to improve the website for his online
toy store. He reads an advertisement in the local paper in which Scoop offers
‘professional web design services’. Bob calls Scoop who tells him that, if he
opts for Scoop’s premium web design service, the number of potential
customers clicking on his website will increase by 400,000. Bob is impressed
by this, as well as Scoop’s reasonable hourly rates. He therefore decides to
contract with Scoop. However, Scoop is only a trainee web designer and
makes little improvement to the website. The visitors to Bob’s online store do
not increase and instead customers prefer to shop with Bob’s competitors.
Bob is furious because he believes he would have made £30,000 in pre-
Christmas profits had he got 400,000 more customers. Furthermore, he is
now unable to pay the rent on his High Street shop and he is evicted from the
premises.
Advise Bob.
General remarks
This question was related to the issues of pre-contractual statements. One issue is
to establish if the statements are contractual terms. For agreement contractual
terms need to be certain. However, candidates are not required to consider
agreement issues here in any detail.
Candidates should identify relevant statements such as ‘professional web design’
and ‘increase in customers’. These are quite vague terms unlikely to be terms of a
contract. This should guide candidates to consider misrepresentation.
Some candidates considered this to be an issue of breach of contract. If this
approach was taken then the losses from the breach would have been too remote.
This may indicate that this is an unlikely claim and is a clue that the question is
actually focused on the tort of misrepresentation.
Candidates should first identify if there is an actionable misrepresentation. A useful
way to do this is to define a misrepresentation and then work through that definition
applying it to the statements. On the facts there was an indication the statements
did not induce the contract, which should be addressed. After fully discussing this
with reference to relevant case authority the next issue is to establish which type of
misrepresentation is the best option for a claim. This would then lead to a
discussion of the relevant remedies which will follow from each time of
misrepresentation.
Law cases, reports and other references the Examiners would expect you to
use.
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Dimmock v Hallett (1866) LR 2 Ch App 21; Bisset v Wilkinson [1927] AC 177; Esso
v Marden [1976] QB 801; Edgington v Fitzmaurice (1885) 29 Ch D 459; Museprime
v Adhill (1991) 61 P&CR 111; Derry v Peek (1889) 14 App Cas 337; Howard Marine
v Ogden [1978] QB 574; Hedley Byrne v Heller [1964] AC 465; Royscott v
Rogerson [1991] 2 QB 297; Misrepresentation Act 1967 s.2(1); East v Maurer
[1991] 1 WLR 461.
Common errors
Candidates failed to identify which statements could be actionable. Also some failed
to establish if all the elements of an actionable misrepresentation were present. A
failure to use the relevant case law to support the arguments and to explain which

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LA1040 Elements of the law of contract

remedies would follow. Some candidates confused the claim under s.2(1)
Misrepresentation Act 1967 and negligent misstatement under Hedley Byrne v
Heller.
A good answer to this question would…
Take the answer logically, defining a misrepresentation and then using this
definition to explain, with relevant case law, if the statements made were actionable.
A key feature was the inducement as it appeared that the rates were important to
entering the contract rather than any statements made. Good answers identified the
best route by which to make a claim and the relevant shift in the burden of proof.
The remedies available under each claim were identified and applied to the facts.
Poor answers to this question…
Thought the whole question was about breach of contract. Alternatively, did not
explain which statements were possibly actionable, failed to explain what elements
are essential for an actionable misrepresentation and then to apply it to the facts
with relevant case law. Weaker candidates failed to explain or understand the
different types of misrepresentation, especially the difference between an action
under s.2(1) Misrepresentation Act 1967 and a common law claim in negligence
under Hedley Byrne v Heller. Poor answers also failed to explain the shift in the
burden of proof between deceit and a claim under the Act.
Question 4
Hassan is planning a high profile charity event; the highlight will be the
performance of a ballet, which requires a special stage to be installed. Hassan
contracts with ‘Better Staging’ to install the required stage for a price of
£2,000. They promise to have this in place a week before the event so that the
dancers can practise before the performance. Better Staging call Hassan two
weeks before the event to say they cannot install the staging, as they have
lost the required spanners which cost £300 to replace. As Hassan is
desperate to make the event a success he promises to pay for the
replacement spanners. The staging is then erected as promised, Better
Staging also provide an extra area for the dancers to prepare off stage and
practise their dance steps.
Hassan is delighted with this area and tells Better Staging he will pay them an
extra £100 for this as it has enhanced the dancers’ performance. The event is
a great success and Hassan receives very positive press coverage which
leads to him being hired for further event management ventures.
Hassan had allowed Crab Apple to rent a pitch at the event for £1,000. Crab
Apple made little profit and, at the end of the day, could not pay the £1,000.
Hassan said to Crab Apple “Don’t worry, it’s been a fantastic day for me, £200
will do”. Hassan now regrets saying this and has asked Crab Apple to pay the
balance of the £1,000.
Hassan is now refusing to pay Better Staging for the spanners and the extra
staging.
Advise Hasan.
General remarks
This is a question on consideration, which should be defined with relevant case law.
In relation to the first elements the issue was the performance of an existing
obligation. This is not good consideration, unless something extra was provided
(referring to Stilk v Myrick/Hartley v Ponsonby). Here there was an extra area which
may have been valid consideration for the money. The question was clearly looking

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to a discussion of Williams v Roffey and many candidates did identify this but few
put this in the context of the other cases mentioned above.
The extra area also led to issues of past consideration, which many candidates
identified and dealt with well. Good answers noted this could not get both the £100
and the £300. The last element was in relation to part payment of a debt, where the
common law principles of Foakes v Beer/Pinnel’s Case were relevant. Good
answers then considered how promissory estoppel may alter the conclusion.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Currie v Misa (1875) LR 10; Stilk v Myrick (1809) 2 Camp 317; Hartley v Ponsonby
(1857) 7 E&B 872; Williams v Roffey Bros [1991] 1 QB 1; Foakes v Beer (1884) 9
App Cas 605; Pinnel’s Case (1602) 5 Co Rep 117a; Re McArdle [1951] Ch 669;
Pao On v Lau Yiu Long [1980] AC 614; CLP v High Trees House [1947] KB 130.
Common errors
Failing to consider the extra work as being valid consideration for the £300. Not
explaining clearly the requirements of Williams v Roffey and estoppel. Not seeing
the extra staging area as being extra work undertaken which may have been
consideration for the £300.
A good answer to this question would…
Begin with a definition of consideration then take each of the fact scenarios and
explain the relevant law. Explain the general principles where relevant, with
reference to cases and then look to the exceptions which may apply. Good
application of the facts in relation to the requirements of Williams v Roffey and
estoppel, with close reference to cases.
Poor answers to this question…
Merely listed the different elements of consideration, whether they were relevant or
not. Or they did not put the difficult case of Williams v Roffey in the context of the
earlier cases. Some candidates failed to explain estoppel or applied it incorrectly as
a sword in the first two claims.
Question 5
The University of Bloomsbury booked the Treaty String Quartet to perform at
their Graduation Ceremony on 20th August 2013. They promised to pay
£10,000 for this performance. They paid £1,000 on 1st June 2013 and promised
to pay a further £3,000 on 1st July 2013 (although this was not in fact paid) and
the balance on the day of the ceremony. On 30th June 2013 the Treaty String
Quartet bought their plane tickets (costing £2,000).
On 1st March 2013 Hamid rents a flat for six months, to cover the period of the
revision, exams which end on 30th May and graduation in August, so he can
focus on his studies then really be ready for graduation celebration. The lease
requires the deposit to be paid on 1st March then monthly payments on the
first of each month.
Advise the parties on their rights and liabilities (if any) in the following
alternative situations.
a) On 2nd July a series of strikes means that the graduation is cancelled
for security reasons.

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LA1040 Elements of the law of contract

b) On 2nd July the graduation is cancelled because the University has

decided it is too expensive and they tell the Treaty String Quartet not to
arrive.
General remarks
The issue here is discharge of contract.
Treaty String Quartet (TSQ)
In (a) University of Bloomsbury (UB) will argue the contract is frustrated, which
needs to be defined and it is useful to begin with the original position that contracts
are meant to be performed (Paradine v Jane). If the contract is frustrated, which it
appears it may be here as the strikes were beyond their control and not their fault,
then the consequences in common law and under the Law Reform (Frustrated
Contracts) Act should be explained. TSQ will claim a breach and damages, which a
careful plan of the answer should see is relevant to the consideration in part (b).
In b) this is likely to be an anticipatory breach. If there is a breach, then explain the
consequence of this and the likely remedies which could be claimed could be validly
considered.
Hamid (H)
In (a) it is difficult to say a lease is frustrated, as he has had some benefit. If it is
frustrated then explain the damages. In b) there is no real change. The role of H is
to consider the possibility of frustration of a lease and is a small part of the answer.
Note that this part of the answer is much briefer than the discussion with TSQ.
Some candidates failed to consider this part of the answer.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Paradine v Jane (1647) Aleyn 26; Taylor v Caldwell (1863) 3 B&S 826; Krell v
Henry [1903] 2 KB 740; Herne Bay v Hutton [1903] 2 KB 683; Super Servant Two
[1989] 1 Lloyd’s Rep 148; Chandler v Webster [1904] 1 KB 493; Fibrosa v Faribairn
[1943] AC 32; National Carriers v Panalpina [1981] AC 675; Law Reform
(Frustrated Contracts) Act 1943; Hadley v Baxendale (1854) 9 Exch 341.
Common errors
Failing to consider Hamid and his possible claims. Failing to identify the elements of
frustration and then how this applied to the facts. Failing to understand and apply
the remedies which may apply. No consideration of the remedies if the contract was
breached.
A good answer to this question would…
Define frustration and then explain if the facts presented a frustration of the
contracts. Clearly explained the consequences of a frustration, with reference to
common law and legislation. Also explained briefly the consequences of breach and
recoverable losses.
Poor answers to this question…
Failed to identify this as a frustration question and only considered breach of
contract. Merely listed the elements of frustration and failed to explain how the
principles related to the facts. Failed to explain the consequences of frustration for
all the parties.

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Question 6
Julie provides exclusive make-up, many of the transactions being over the
internet to international clients. Mildred has been in email contact with Julie
showing interest in the Whole Bodycare Range. Mildred claims to be a
famous body-double actress (Hellie Wainrite) who needs the makeup for her
new blockbuster film part. Julie thinks this will be good marketing for her
products and after research on the internet realises this could be very good
for her business. Mildred arranges by telephone to visit Julie’s showroom
saying she wants to buy every item in her Whole Bodycare Range at a total
cost of £8,000. When Mildred arrives, she offers to pay by credit card. The
name printed on the credit card is Hellie Wainrite. Mildred explains to Julie
that she is near her credit limit and so pays a deposit of £3,000 by credit card
and promises to pay the outstanding amount later that day. Keen to make the
sale, Julie lets Mildred take the makeup with her in its large presentation box.
Unknown to both, the presentation box actually contains the Male Beauty Kit.
Mildred then takes the unopened box to Noor, a local beauty shop, and sells it
to her for £2,000 and disappears.
The credit card is later declined by the bank as it was reported stolen and
Julie has seen the presentation box on display at Noor’s shop.
Advise Julie on any claims he may have against Noor.
General remarks
This question was in relation to mistake. There were two mistakes here, one as to
the identity of the customer, which was a unilateral mistake, and then a common
mistake as to the subject matter. Candidates should have noticed that the rubric
asked about a claim against Noor, which means that there should have been only
the briefest reference to the fraud by Mildred. This should have been in relation to
Noor obtaining good title, if the contract was not void for mistake, in which case
Noor could not obtain good title, and then Julie could recover the product. If it was
voidable for fraud then Noor may have obtained good title and there could be no
claim against her. The main focus should have been if the contract was entered into
under an operative mistake. There should have been a discussion of distance and
face to face contracts in relation to identity and then if the mistake as to the product
was sufficiently fundamental to destroy the contract agreement.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Shogun Finance v Hudson [2003] UKHL 62; Cundy v Lindsay (1878) 3 App Cas
459; Phillips v Brooks [1919] 2 KB 243; Ingram v Little [1961] 1 QB 31; Bell v Lever
Bros [1932] AC 161; Leaf v International Galleries [1950] 2 KB 86; Great Peace
Shipping v Tsavliris [2002] EWCA Civ 1407.
Common errors
Many candidates failed to consider the second error which was evident on the facts.
Also some candidates answered this as a misrepresentation question, which may
have stemmed from a failure to read the rubric.
A good answer to this question would…
Have identified the two mistakes which may have assisted any claim Julie would
want to make. For the identity it was necessary to decide if the contract was made
at a distance or face to face and the relevance of the cases in this area. The
mistake as to the nature of the product was also considered and the effect of such a

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LA1040 Elements of the law of contract

mistake on the ‘contract’ with Mildred and how this would enable Julie to recover
the product from Noor.
Poor answers to this question…
Failed to identify this as a mistake question despite the clear clues in the question
and the rubric that only if the contract was void would there be a claim against Noor.
Some candidates thought that as the claim was against Noor that it was a question
on rights of third parties, despite there being an essay on this topic earlier in the
examination paper.
Question 7
‘The traditional approach in English contract law is to award damages for
non-pecuniary losses very reluctantly. Recent case law, however, reveals a
more generous attitude towards the recovery of this type of loss. It is difficult
to justify this latter approach.’
Discuss.
General remarks
The question was very specific and there could have been a valid brief discussion
of the general principles of damages, with reference to Robinson v Harman. This
should have been a brief discussion and the main body of the answer should have
considered how the general reluctance to award damages for non-pecuniary losses
in contract has been viewed by the courts. There should have been close reference
to relevant case law and critical commentary on those cases.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Robinson v Harman (1848) 1 Ex 850; Ruxley Electronics v Forsyth [1996] AC 344;
Hadley v Baxendale (1854) 9 Exch 341; Farley v Skinner [2001] UKHL 49; Jarvis v
Swan’s Tours [1973] QB 233.
Common errors
Candidates failed to see this as a question specifically on non-pecuniary losses.
This led to a discussion of the general principles of damages. While this may be
valid briefly to put the essay in context the essay should have focused on non-
pecuniary losses.
A good answer to this question would…
Explain the traditional approach to contract damages briefly and then explain why
the courts were reluctant to award damages beyond the traditional measures and
comment on the cases where the courts had done this.
Poor answers to this question…
Merely explained the different measures of damages traditionally awarded and did
not address the question posed. Alternatively the cases of non-pecuniary awards
were merely described and not commented on or analysed critically.
Student extract
In Addis v Gramphone the courts refuse to award the victim of non-
pecuniary losses. However in recent case law the courts reveal a more
generous attitude towards the recovery of this type of loss. In Heywood v
Weller the court will only award damages for non-pecuniary losses when
the purpose of the contract is solely on relaxation and peace of mind. In
Farley v Skinner the courts took the same approach although the purpose
of the contract is not solely on the relaxation and peace of mind.

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Comment on extract
The candidate here is evidencing a good range of knowledge in the area examined.
The candidate is showing that there has been a move in recent decisions. This
shows that they are going to actually answer the question posed. They then linked
the decision in Farley v Skinner with basic contractual principles that the non-
pecuniary losses were in the contemplation of the parties so therefore within the
traditional contract model. This demonstrated that the candidate had thought about
the question, made the connection with wider contractual damages principles and
answered the question posed. An essay requires there to be some critical analysis
of the law.
Question 8
Terence wishes to hire a bicycle for the day from Rides Ltd, a bicycle hire
company that supplies bicycles at various docking stations across London.
He arrives at a docking station and carefully reads the instructions written on
the docking station’s screen. He is asked to insert his credit card and on
doing so the machine prints out a ticket. Terence is then asked to confirm the
hire charge of £20. Terence confirms this hire charge and the machine returns
the credit card. On one side of the ticket is a code which unlocks the bicycle
from the docking station. On the other side of the ticket is a term that states:
‘Rides Ltd limit liability for any damage whatsoever and howsoever caused
during the operation of their bikes to the daily hire charge of £20.’
Terence is enjoying his ride across London when suddenly the brakes on the
bicycle fail and he falls into a canal. Terence injures his right arm and needs
physiotherapy. He also ruins his £2,000 laptop that he was carrying at the
time of the accident.
Advise Terence.
General remarks
This question considered breach of contract and the attempts to limit liability for any
breaches. The starting position should have been to identify the breach of contract,
with reference to implied terms under the Supply of Goods and Services Act, and
the losses which flowed from those breaches. The next step in this type of answer
is to consider if the attempt to limit liability of Rides Ltd has been incorporated into
the contract. This requires close reference to case law, timing, nature of the
document and notice. After this there should have been a discussion of the
construction arguments, some students failed to do this despite the vague nature of
the limitation clause. After discussing the common law principles students should
then discuss the Unfair Contract Terms Act (UCTA) and Unfair Terms in Consumer
Contracts Regulations (UTCCR).
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Supply of Goods and Services Act 1982; Unfair Contract Terms Act 1977; Unfair
Terms in Consumer Contract Regulations 1999; Thornton v Shoe Lane Parking
[1971] 2 QB 163; Parker v SER (1877) 2 CPD 416; Spurling v Bradshaw [1956] 1
WLR 461; Chapleton v Barry UDC [1940] 1 KB 532; Andrews v Singer Co [1934] 1
KB 17; Ailsa Craig v Malvern Fishing Co [1983] 1 WLR 964; Canada Steamship v R
[1952] AC 192; R&B Customs v UDT [1988] 1 WLR 321; George Mitchell v Finney
Lock Seeds [1983] 2 AC 803; Smith v Eric Bush [1990] 1 AC 831; OFT v Abbey
National [2009] UKSC 6.

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LA1040 Elements of the law of contract

Common errors
Failing to identify the breach for which Rides are trying to limit liability. Failing to
fully consider the common law mechanisms of dealing with exclusion or limitation
clauses. Failing to consider the construction tests, when this term was very broad.
Not explaining how the principles of unreasonableness under UCTA were applied. It
is not a stand-alone requirement but needs to be established in tandem with other
sections of UCTA. Failing to consider the Regulations.
A good answer to this question would…
Deal logically with the answer, identify the breach and then apply the common law
principles of incorporation and construction to the facts. Then after fully discussing
this with reference to relevant case law, apply UCTA and UTCCR.
Poor answers to this question…
Failed to use the relevant cases to support the arguments on incorporation, some
failing to consider the common law rules at all. Some candidates failed to consider
any relevant construction arguments despite the vague nature of the limitation
clause. Some candidates also just applied the reasonableness test under UCTA
without explaining how they reached s.11. The test of reasonableness is not a
stand-alone section, it is related to attempts to exclude liability under ss.2,3, etc.

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Examiners’ report 2014

LA1040 Elements of the law of contract – Zone B

Introduction
General examination advice is to ensure that you read the examination questions
carefully and decide the topic which is being examined and which questions you
want to tackle. The questions are set out to allow you to demonstrate your
knowledge and understanding in relation to specific issues. Although there may be
some overlap there are no two questions on the same topic. There are no trick
questions, so ask yourself ‘why have the Examiners told me this, what legal issues
are raised on these facts?’
There were some very good answers in this examination, which had a good grasp
of the relevant case law and legislation. In problem questions good answers directly
applied this knowledge to the facts presented. In essays they built critically on this
knowledge and answered the actual question posed.
There are certain errors which occur in most examination sittings. One is a failure to
identify the correct area of law; this may arise from a failure to actually read the
rubric and identify who is being advised (see specific comments below). Also, some
candidates answer two questions on the same topic. It is highly unlikely that this is
being asked for, as explained above, so read the questions carefully to see the
clues that there are in the question to help focus the answer. If the subject guide
has been followed and the activities undertaken this should help you identify the
facts which raise certain legal issues, and then the appropriate response.
Another problem is failure to use relevant authority to support arguments. There
remain some answers which have no authority at all; these cannot gain credit for
the required knowledge which needs to be evidenced in the answers. Some
candidates who use no cases but say ‘there is a decided case’ will also gain little
credit, in a common law system there will be cases on most issues covered so this
is not showing knowledge of cases.
Additionally, there are candidates who write all they know on a particular area,
whether relevant to the question or not, then ‘apply the law’ in a short paragraph.
This is not the correct style. This style leads to repetition, which is time consuming
and will mean there is time pressure to fully answer the question, and an inability to
show understanding of the relevant law by applying it to the given facts. There were
a large number of answers which had a long introduction setting out the issues to
be discussed, which was little more than a repetition of the key facts, followed by a
‘statement of law’ which was either an essay or list of all the issues which are
related to the subject, whether relevant or not, then ‘application to facts’ where the
candidate concluded if there was an issue or not. This style does not allow you to
show which part of the law you set out is relevant to your conclusion. You must
apply the law to the facts supported by the relevant law. Remember you are asked
to advise a person on the given facts. So being selective of the relevant law to their
facts is essential.

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LA1040 Elements of the law of contract

A logical answer will also show that you have planned your answer based on the
relevant facts and thought logically about the demands of the facts. In problem
questions advise each party separately to help in keeping their answer logical (see
specific advice). In essays remember to formulate an answer that actually
addresses the question posed. There is still a tendency to write the answer to the
question candidates wish they had been asked or a prepared answer to a question
which has appeared in the past. This will gain little credit, if any, as the essay
requires a critical approach to the issue based on the question posed.
There were also some candidates who did not plan their time, answering three
questions well with a weak, or sometimes non-existent, fourth answer. This means
that there are immediately 25 per cent of potential marks lost. In an age of
electronic writing it may help you to practice writing timed answers in long hand.
This will pay dividends in the final examinations.

Specific comments on questions

Question 1
On 1st May Aga decides to sell her collection of pots. She places an advert in
the local paper, ‘Beautiful Arden pot for Sale. £500 or nearest offer.’ She
includes her telephone number, email address and postal address on the
advert. On 2nd May Beatrice emails Aga saying, ‘I will buy the pot for £450.’
Aga replies saying, ‘I will take £475 but please let me know by 5pm today as
another customer is calling to see the pot tomorrow.’ Beatrice immediately
emails back asking if Aga will accept payment by cheque. By 4.30pm she has
not heard from Aga so sends a further email to say she will buy the pot for
£475. Aga’s internet connection is lost that afternoon and Aga does not get
this email until it is reconnected on 5th May. On 3rd May Chad calls Aga and
says he will buy the pot for £400 but Aga says she would not take less than
£475. Chad says he will think about this. Later that day Chad writes to Aga
saying he will pay £475 but the letter is misaddressed and never arrives. On
4th May Aga sells the pot to Didier for £500. Didier, a friend of Beatrice, meets
her on 5th May and tells her of his luck in getting the pot. Beatrice is upset as
the pot would complete her Arden Collection.
Advise Aga.
General remarks
This question was related to agreement: it would be useful for candidates to take
each party and deal with their issues chronologically.
First, discuss the nature of the advert, offer or invitation to treat (ITT) with relevant
case law to explain the principles. It is likely that this is an ITT. Some candidates
also concluded that this was not an offer as it was a bi-lateral advertisement; the
advertisement was not a bi-lateral situation as it was made to the world in general.
The next logical stage was to consider the nature of Beatrice’s (B) communication,
as the advert is likely to be an ITT it is B who makes an offer. Some candidates
concluded this was a counter offer, which is illogical as a counter offer requires an
original offer to counter. It is Aga (A) who makes a counter offer, which should be
explained with reference to relevant case law. This offer will end at 5pm that day,
when it will lapse. Candidates may explain that there is no obligation to keep the
offer open until this time, with reference to relevant case law.

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 Examiners’ report 2014

B’s email following A’s offer could be a request for information, which appears most
likely, so the offer is still open. If there is a counter offer, then this ends A’s offer
which cannot be accepted by later email. This should be explained with reference to
relevant case law. If the email was a request for information then B has later sent
acceptance, but not communicated this until 5th May. There should have been
discussion with the relevant law whether this communication was effective. If the
communication was not effective, then when B meets Didier (D) who says he has
purchased the pot, does this mean the offer is revoked? Is Didier reliable? Good
answers noted that this was not necessary as the offer would have lapsed earlier so
there was no need to revoke.
Chad’s (C’s) call would be an offer, which follows logically from the earlier
conclusion that the advert was an ITT, then there is a counter offer by A. Then C
sends a letter which seems to be an acceptance. This must be communicated, but it
is misaddressed so is not communicated. There should be a discussion of the
postal rule with relevant case law. The offer would remain open until it was revoked
or lapsed on a reasonable passage of time.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases which are relevant.
Smith v Hughes (1871) LR 6 QB 597; Partridge v Crittenden [1968] 1 WLR 1204;
Hyde v Wrench (1840) 3 Beav 334; Entores v Miles Far East Corp [1955] 2 QB 327;
Thomas v BPE Solicitors [2010] EWHC 306; Brinkibon v Stahag Stahl [1983] 2 AC
34; Adams v Lindsell (1818) 1 B&Ald 681; Korbetis v Transgrain Shipping [2005]
EWHC 1345 (QB); Dickinson v Dodds (1876) 2 Ch D 463; Routeledge v Grant
(1828) 4 Bing 653.
Common errors
Considering the advert as an offer, which is unlikely on authority. Giving a long
detailed discussion of the facts of cases that were irrelevant to the facts in the
question. Failing to plan the answer to ensure that all the issues were considered
fully. Very few candidates considered the offer to B as lapsing at 5pm.
A good answer to this question would…
Deal with the parties logically and consistently, using case law consistently to
support their argument. The best answers dealt with the majority of the issues
identified above and had a good range of cases to support their points.
Poor answers to this question…
Failed to discuss the issues logically and the relevant communication issues. For
example, discussing the postal rules in relation to B and A when there was no issue
of post in their communication. Failed to use case law or were overly descriptive of
the cases in this area without applying the principles (ratio and obiter) to the
relevant facts.
Student extract
Counter offer can be defined as an act to alter the terms of the offer put
forward by the offeror by the offeree. This can be seen in the authority of
Hyde v Wrench where and offeror proposed to sale his land for £1000 and
the offeree priced £950 which the offeror rejected and the offeror later came
back to agree to buy for the £1000 ad the offeror rejected. The court held
that the first price of £950 by the offeree destroyed the origin offer and his
price was then the new offer which the offeror can choose to accept or
reject.

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LA1040 Elements of the law of contract

What is the effect of Beatrice e-mail to Aga on the 2nd May? The e-mail
send by Beatrice on 2nd May is likely to be a statement of intention since the
offer is not definite and give room for further negotiation.
Comment on extract
This part of an answer sets out clearly what a counter offer is, with relevant
authority. The candidate then explains at length the details of the case, which is
rarely necessary. Facts of cases are usually only needed if you are distinguishing
the given facts (in the problem question) from the ones in the case. This is not the
position here. The main problem here is that the next part of the answer has no
issue of counter offer, so the authority is correct but is not relevant to the facts. At
this stage of the chronology there is no offer to be countered. So while the
candidate has some knowledge of the law it is not clearly understood as it has not
been applied correctly.
Student extract
An offer is an expression of willingness to contract on specified terms made
with the intention of becoming binding on acceptance; Treitel. As per Moran
v University College Salford (#2) the courts take an objective approach to
the matter and require sufficient certainty from an offer as per Storer v
MCC. This was emphasized in Gibson v MCC although Lord Denning
argued that a strict adherence to the offer-acceptance model may often be
a hindrance.
A’s advert is likely to be an invitation to treat as per Partridge v Crittenden
and hence incapable of acceptance: it seems to lack the requisite criteria
under Carlill v Carbolic Smoke Ball to constitute a unilateral offer.
Comment on extract
This candidate has begun by clearly defining the meaning of an offer at law, with
reference to academic authority and cases. You will see there is no detail of the
facts of the case and although this is a case not commonly used it is correctly
applied. Sometimes candidates think that only the cases in the subject guide or
textbook can be used but look at updates or your own reading for other cases to
support your arguments. The principle of an offer is clearly stated, the need for
certainty and the cases of Gibson/Storer v MCC are both referenced without long
details as to what actually happened but some argument which was raised in the
case.
In the second paragraph the candidate immediately advises on the nature of the
advert, with reference to relevant authority. Although there is no explanation of what
criteria is missing from Carlill this is dealt with clearly. Perhaps a line saying that the
certainty that existed in Carlill and the impossibility of running out of stock were
possibly the relevant criteria.
Question 2
‘It is important to understand that the legal regulation of illegal contracts and
contracts which are contrary to public policy is characterised by a tension
between competing policies.’ (McKendrick, Contract Law)
Explain the situations when a contract will be tainted by illegality and the
policy behind such rules.
General remarks
The question focused on the public policy behind contracts which are deemed
illegal and the tension between the competing policies. The policy of freedom of
contract and preventing this freedom becoming the basis of illegal agreements.

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 Examiners’ report 2014

Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases or statutes which are relevant.
Gaming Act 2007; St John Shipping v Joseph Rant [1957] 1 QB 267; Shaw v
Groom [1970] 2 QB 504; Pearce v Brooks (1866) LR 1 Ex 213; Lowe v Peers
(1768) 2 Burr 2225; R v Andrews [1973] QB 422; Proactive Sports v Rooney [2011]
EWCA Civ 1444.
Common errors
Failing to put the question in context and merely listing the issues where contracts
are illegal and the effect of illegality.
A good answer to this question would…
Look at the situations, with reference to cases, which are deemed illegal and
perhaps, in relation to gaming, why there may be changes.
Poor answers to this question…
Failed to actually answer the question and look at the policy behind the rules on
illegality.
Question 3
Brenda wishes to rent business premises in Eastfield Shopping Centre from
which to run her cookware business. Norman, the owner of Eastfield
Shopping Centre, informs Brenda that she should rent the premises opposite
the busy supermarket chain, Price Cutters, since she would be assured of a
large number of customers walking past. He also tells her that he will be
launching a nationwide advertising campaign to ensure that Eastfield
Shopping Centre is a success. Later that week, Norman discovers that Price
Cutters has gone into receivership and is closing all of its stores. Brenda is
looking to attract upmarket customers for her range of cookware and, on
discovering that the premises Norman suggested are next door to an
exclusive fashion shop, decides to rent the premises from Norman. The next
day, Norman realises that he does not have enough money to launch his
advertising campaign. Several months later, Brenda’s cookware business is
in serious financial trouble. Shoppers have not heard of Eastfield Shopping
Centre and it is rarely visited. Since the closure of Price Cutters the situation
has become worse. Brenda’s bank demands that she repay her loan and she
is forced to sell her family house.
Advise Brenda.
General remarks
This is an issue of misrepresentation. Candidates can validly but briefly consider
why it is not a term of the contract, with reference to the relevant cases and tests.
Candidates should then define a misrepresentation and use that definition to help
identify if there is an actionable misrepresentation. At this stage candidates should
not try to say if it is fraudulent or negligent just if there is a basis of action. Identify
the pre-contractual statements, large number of customers, location of the store
and the campaign launch. Large numbers may be ambiguous but the store location
is clear as is the intention to launch a campaign. The issue which is always
important is that the statements need to induce the contract, which should be
considered in some detail as it seems that there may be other inducements to
enter. All of these need to be supported by relevant case law.
If there is a misrepresentation then what type is it? Fraudulent, which can be
compared with liability under the Misrepresentation Act? Where the burden of proof

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LA1040 Elements of the law of contract

lies can be discussed. To a lesser extent there could be a common law claim under
Hedley Byrne. In each situation explain the relevant measure of damages and
remedies. This is where candidates can show understanding of why the relevant
claims are important. If the losses appear to be remote then a claim under common
law is subject to foresight but under fraud and the Act this is not necessary.
Candidates should also consider rescission and the relevant bars. If relevant then
discuss in detail, if not relevant then briefly say why not.
It may be valid to say there is a contract term, which should then be discussed as to
the damages which are available.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases which are relevant.
Dimmock v Hallett (1866) LR 2 Ch App 21; Bisset v Wilkinson [1927] AC 177;
Esso v Marden [1976] QB 801; Edgington v Fitzmaurice (1885) 29 Ch D 459;
Museprime v Adhill (1991) 61 P&CR 111; Derry v Peek (1889) 14 App Cas 337;
Howard Marine v Ogden [1978] QB 574; Hedley Byrne v Heller [1964] AC 465;
Royscott v Rogerson [1991] 2 QB 297; Misrepresentation Act 1967 s.2(1); East v
Maurer [1991] 1 WLR 461.
Common errors
Candidates failed to identify which statements could be actionable. Also some failed
to establish if all the elements of an actionable misrepresentation were present. A
failure to use the relevant case law to support the arguments and to explain which
remedies would follow. Some candidates confuse the claim under s.2(1)
Misrepresentation Act 1967 and negligent misstatement under Hedley Byrne v
Heller.
A good answer to this question would…
Take the answer logically, defining a misrepresentation and then using this
definition to explain, with relevant case law, if the statements made were actionable.
A key feature was the inducement as it was not clear that the shop or campaign
were the only inducement. Good answers would identify the best route by which to
make a claim and the relevant shift in the burden of proof. The remedies available
under each claim should be identified and applied to the facts.
Poor answers to this question…
Thought the whole question was about breach of contract. Alternatively did not
explain which statements were possibly actionable, failed to explain what elements
are essential for an actionable misrepresentation and then to apply it to the facts
with relevant case law. Weaker candidates failed to explain or understand the
different types of misrepresentation, especially the difference between an action
under s.2(1) Misrepresentation Act 1967 and a common law claim in negligence
under Hedley Byrne v Heller. Weaker candidates also failed to explain the shift in
the burden of proof between deceit and a claim under the Act.
Question 4
Simon is a famous record producer and talent show host. His nephew, Louis,
is desperate for the chance to enter the music business and begs Simon to
give him the opportunity to perform at a televised talent show that Simon is
organising. Simon tells Louis that, if he stops having his singing lessons at
Simon’s house, he will let him perform at the show. Louis cancels all his
singing lessons. Simon later regrets his decision and informs Louis that he
will not permit him to perform at the show.

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 Examiners’ report 2014

Carmel, Simon’s girlfriend, wishes to do something special for Simon. Two

weeks before the talent show she contacts Roses, a florist, and pays £1,000
for them to send a bouquet of flowers to Simon’s house every day until the
day of the show. She tells them that the flowers are for a very famous person
in the music industry. Roses stop sending the flowers after only two days.
Simon is upset, and rings them to demand that they continue to send the
flowers, in accordance with their contract.
Two days before the show is to start, one of the talent show judges, Diva,
informs Simon that she has been offered her dream chance to perform in Los
Angeles and no longer wishes to appear as a judge on his show. Simon is
devastated since Diva is the most popular judge and attracts high viewing
figures. He fears that the show will not be a success without her. He tells
Diva that he will double her salary if she stays. Diva agrees. However, after
the show has finished, Simon changes his mind and refuses to pay her the
extra money.
Advise Simon.
General remarks
This was a combined question, with consideration, privity and intention to create
legal relations. In the first situation with Louis two issues were relevant. First,
whether there was an intention to create legal relations, reference to the
presumptions in family situations and how to rebut the presumption. Second, to
define consideration and its role in contract law. What was the consideration – did it
have value in law? For some reason candidates considered past consideration as
relevant here. This indicated a lack of preparation and understanding.
In relation to the roses Simon cannot enforce the contract as he is not party to the
arrangement, so the relationship between consideration and privity can be
discussed. Reference to cases and statute were relevant here. Again some
candidates also considered past consideration here. This may be a failure to see
the overlap with privity and consideration.
In the last situation with Simon and Diva the issue is performance of existing
obligation. Candidates should explain the general rule and the exceptions. The
principles of Stilk v Myrick and Williams v Roffey should be considered and clearly
applied.
Some candidates applied estoppel to all parts of the answer, showing a failure to
see that promissory estoppel is a shield and not a sword, so cannot be used to
found a claim.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases which are relevant.
Currie v Misa (1875) LR 10; Contract (Rights of Third Parties) Act 1999; Chappell v
Nestle [1960] AC 87; White v Bluett (1853) 23 LJ Ex 36; Tweddle v Atkinson (1861)
1 B&S 393; Stilk v Myrick (1809) 2 Camp 317; Hartley v Ponsonby (1857) 7 E&B
872; Williams v Roffey Bros [1991] 1 QB 1; Balfour v Balfour [1919] 2 KB 571; Pao
On v Lau Yiu Long [1980] AC 614.
Common errors
Some candidates failed to identify all the areas covered in this mixed topic question.
The topics covered here are commonly connected and should have been dealt with
separately. Again there was a problem with some candidates failing to use the
relevant cases to support the arguments.

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LA1040 Elements of the law of contract

A good answer to this question would…

Recognise all the issues. The two separate issues with the nephew: consideration
and intention to create legal relations. Then the issue of privity and the enforcement
of the agreement by Simon against Roses. The issue with Diva and the
performance of an existing contractual obligation should then be considered. All of
these should be explained with reference to relevant case law.
Poor answers to this question…
Failed to see all the different issues involved in the question and only dealt with
consideration and not the additional points in the question. Failed to use relevant
case law.
Question 5
On 3rd May Zalmi contracted with Bilal to headline at the 6th June concert in
the park for a fee of £10,000. £1,000 was paid on 3rd May, with the remainder
payable after the performance. Bilal spent £2,000 in preparing the necessary
light show for his performance. Zalmi was delighted that Bilal had agreed as
this would result in high profile coverage by TV. Bilal later got a better offer
and informed Zalmi he would not be there. Zalmi said that he would expect
him to arrive as promised on 6th June and Bilal had better uphold their
agreement. Bilal said he would not.
Bilal later decided that it was unfair to let Zalmi down and on 30th May called
Zalmi to say he would be there after all. However on 28th May there had been
terrible floods in the area and Zalmi had cancelled the concert. Zalmi had
leased the land for three months (May, June and July) for the concert and
follow up events, with a monthly rent of £1,000 payable on 1st of each month.
On 30th May Zalmi had told the landlord he would no longer need the field
and the landlord asked for the balance of the rent.
Advise Zalmi on his rights and liabilities.
General remarks
This considers discharge of a contract which covers both breach and frustration
which some candidates failed to see. Bilal (B) makes an anticipatory breach, which
Zalmi (Z) can elect to accept or reject. Here Z has elected to reject the breach; can
he be within the principles of White and Carter? There is a legitimate reason but this
would need the co-operation of B. If B rejects his obligations also remain, which
means that when he cannot perform then he would be in breach. Many candidates
failed to see the issue of anticipatory breach which may be a failure to see the topic
of discharge of a contract as a whole. This then leads to the next issue.
In relation to the floods Z will claim frustration – candidates should define frustration
and consider if this situation fulfils the criteria. It may do, which would then lead to a
discussion of the remedies at common law and statute. If the contract is not
frustrated then there would be breach of contract and the measure of damages
could be considered with reference to the criteria for frustration and the limiting
factors and the relevant case law.
Z may try and make a claim frustration of lease, is this significant enough? This
seems unlikely. Some candidates failed to address this issue.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases which are relevant.

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 Examiners’ report 2014

White and Carter v McGregor [1962] AC 413; Paradine v Jane (1647) Aleyn 26;
Taylor v Caldwell (1863) 3 B&S 826; Krell v Henry [1903] 2 KB 740; Herne Bay v
Hutton [1903] 2 KB 683; Super Servant Two [1989] 1 Lloyd’s Rep 148; Chandler v
Webster [1904] 1 KB 493; Fibrosa v Faribairn [1943] AC 32; National Carriers v
Panalpina [1981] AC 675; Law Reform (Frustrated Contracts) Act 1943.
Common errors
Some candidates failed to identify the issue of anticipatory breach and the effect
that had on the later possible frustration of the contract. Where topics are combined
and overlap both topics should be addressed. Some candidates failed to use
relevant case law for breach, if considered, and frustration. Also some candidates
could not explain the consequences of frustration.
A good answer to this question would…
Deal logically with the possible breach and the options for the innocent party when
faced with anticipatory breach and its implications. Then consider the possibility of
frustration and the consequences of frustration on the contracts.
Poor answers to this question…
Only considered breach or frustration and failed to use relevant case law to support
their arguments.
Question 6
Paul wants to buy a present for his partner Gianni, who is a fan of sports
memorabilia, although Paul hates all sports. In a London wine bar Paul meets
Clovis who claims to be Nicole, a well-known female boxer and Olympic Gold
medal winner. Paul remembers that there had been a female boxing gold
medalist who looked like Clovis. Clovis says she has her winning gloves with
her, and would sell them to Paul for £2,000, with her own message to Gianni.
Paul does not have that money with him and so offers to pay £500 and give
his gold watch as security for the payment. Clovis agrees, and hands over the
gloves, signed ‘To Gianni, simply the best, love Nicole’ and an address for
Paul to forward the money to. Paul thanks Clovis for her trust in him. Clovis
leaves taking the money and the watch. When Paul hands the gloves to
Gianni they discover they cannot be genuine as Nicole is currently in New
Zealand and could not have been in a London Wine Bar. They try to find the
address and discover that it does not exist. On their way back home they see
Paul’s watch in Yazmine’s jewellery shop window. Yazmine explains she
bought it earlier from a young lady for cash.
Gianni had also purchased a pair of gloves from Rocky’s. He believed the
gloves belonged to Rocky Marciano as they were in the Marciano section of
the shop. He was delighted as they were priced at only £50 when an original
pair of gloves would normally cost over £500. When he got them home he
found that they were in fact Rocky Graziani gloves and worth only the £50 he
paid.
Advise Paul on any claims he can have for the return of the watch and if
Gianni can return the gloves to Rocky’s.
General remarks
This is a question on mistake, although there is a fraud by Clovis she has
disappeared and Paul wants to reclaim his watch. To do this he would need to claim
that the sale by Clovis to Yazmine was invalid as Clovis did not own the watch. It is
valid to briefly explain why a claim in fraud is not the best way to achieve his aims.
As there is clearly a fraud it is not a contentious issue and should be dealt with
briefly. Candidates should look at the result required: the return of Paul’s watch

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LA1040 Elements of the law of contract

from Yazmine. This would be based on the contract for the gloves being void for
mistake. The relevant cases on face to face transactions should be explained and
applied. Some candidates spent time on contracts made at a distance, which was
not relevant and indicates a lack of planning or understanding. Candidates show
understanding by clear application of relevant law.
The next issue was the mistake made by Gianni, which appears to be a unilateral
mistake. The question to be addressed is if the mistake was fundamental, with
reference to relevant case law.
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases which could be included and not an indication of all
cases which are relevant.
Shogun Finance v Hudson [2003] UKHL 62; Cundy v Lindsay (1878) 3 App Cas
459; Phillips v Brooks [1919] 2 KB 243; Ingram v Little [1961] 1 QB 31; Bell v Lever
Bros [1932] AC 161; Leaf v International Galleries [1950] 2 KB 86; Great Peace
Shipping v Tsavliris [2002] EWCA Civ 1407.
Common errors
Some candidates failed to answer both the mistakes which meant that the question
was not fully answered. Also many candidates answered this as a
misrepresentation question. The clue is that there is clearly a fraud and the person
who committed the fraud has disappeared. So the best remedy would be to claim
mistake. This may fail but this is the only way to gain the result which Paul wants.
As Question 3 is about misrepresentation this logically cannot be on the same topic.
A good answer to this question would…
Explain why the claim in misrepresentation will not be made, and why, briefly. Then
consider the test for making a contract void for mistake, explaining that this will
enable Paul to reclaim the watch. Conclude on the likelihood of this claim. Then
deal with the separate issue of Gianni and the gloves.
Poor answers to this question…
Some candidates considered this to be a question of misrepresentation despite the
issues explained above. Some candidates merely listed the relevant cases on
mistake without considering how they relate to the facts, for example long
discussion of distance contracts when this was face to face. Poor answers failed to
consider the issue of mistake for Gianni.
Question 7
‘The traditional approach in English contract law is to award damages for
non-pecuniary losses very reluctantly. Recent case law, however, reveals a
more generous attitude towards the recovery of this type of loss. It is difficult
to justify this latter approach.’
Discuss.
General remarks
The question was very specific and there could have been a valid brief discussion
of the general principles of damages, with reference to Robinson v Harman. The
main body of the answer should have considered how the general reluctance to
award damages for non-pecuniary losses in contract has been viewed by the
courts. There should have been close reference to relevant case law and critical
commentary on those cases.

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 Examiners’ report 2014

Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Robinson v Harman (1848) 1 Ex 850; Ruxley Electronics v Forsyth [1996] AC 344;
Hadley v Baxendale (1854) 9 Exch 341; Farley v Skinner [2001] UKHL 49; Jarvis v
Swan’s Tours [1973] QB 233.
Common errors
Candidates failed to see this as a question specifically on non-pecuniary losses.
This led to a discussion of the general principles of damages. While this may be
valid briefly to put the essay in context the essay should have focused on non-
pecuniary losses.
A good answer to this question would…
Explain the traditional approach to contract damages briefly and then explain why
the courts were reluctant to award damages beyond the traditional measures and
comment on cases where the courts had done this.
Poor answers to this question…
Merely explained the difference measures of damages traditionally awarded and did
not address the question posed. Alternatively the cases of non-pecuniary awards
were merely described and not commented on or analysed critically.
Student extract
As in Addis v Gramphone, English law is reluctant to award damages for
non-pecuniary.
Recent case shows a more generous attitude, but it cannot be said it is
unjustified in all case.
The tide starts to turn with Rostyh Electronics and construction v Forstley.
On some case, the contract is for employment and court infer an implied
term that employer should be dealing honestly in their business as not to
‘taint’ employee future employment opportunities. Court award damages to
employee in such case (Malik v BCCI, Mahmud v BCCI; Unisys).
Comment on extract
Here the candidate has begun with a strong case reference and a clear statement
of the law. The grammar is weak but only if the grammar is so poor that it leads to
confusion will this be reflected in the marks. The next single sentence paragraph
refers to a change but with no case law there. In the next single sentence
paragraph the case is incorrectly referenced but it is close enough that the
Examiners can understand the case which is meant. However this is not a strong
answer as this is a crucial case in this area so needs more analysis. Critical
commentary on this case could form the basis of a good essay in this area.
Remember to be critical of the law and if you are going to write an answer to an
essay question then you need to be able to comment critically on the cases and law
to gain the higher marks.
Question 8
Terence wishes to hire a bicycle for the day from Rides Ltd, a bicycle hire
company that supplies bicycles at various docking stations across London.
He arrives at a docking station and carefully reads the instructions written on
the docking station’s screen. He is asked to insert his credit card and on
doing so the machine prints out a ticket. Terence is then asked to confirm the

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LA1040 Elements of the law of contract

hire charge of £20. Terence confirms this hire charge and the machine returns
the credit card. On one side of the ticket is a code which unlocks the bicycle
from the docking station. On the other side of the ticket is a term that states:
‘Rides Ltd limit liability for any damage whatsoever and howsoever caused
during the operation of their bikes to the daily hire charge of £20.’
Terence is enjoying his ride across London when suddenly the brakes on the
bicycle fail and he falls into a canal. Terence injures his right arm and needs
physiotherapy. He also ruins his £2,000 laptop that he was carrying at the
time of the accident.
Advise Terence.
General remarks
This question considered breach of contract and the attempts to limit liability for any
breaches. The starting position should have been to identify the breach of contract,
with reference to implied terms under the Supply of Goods and Services Act, and
the losses which flowed from those breaches. The next step in this type of answer
is to consider if the attempt to limit liability of Rides Ltd has been incorporated into
the contract. This requires close reference to case law, timing, nature of the
document and notice. After this there should have been a discussion of the
construction arguments, some students failed to do this despite the vague nature of
the limitation clause. After discussing the common law principles students should
then discuss the Unfair Contract Terms Act (UCTA) and Unfair Terms in Consumer
Contracts Regulations (UTCCR).
Law cases, reports and other references the Examiners would expect you to
use
This is an indication of cases and authority which could be included and not an
indication of all cases which are relevant.
Supply of Goods and Services Act 1982; Unfair Contract Terms Act 1977; Unfair
Terms in Consumer Contract Regulations 1999; Thornton v Shoe Lane Parking
[1971] 2 QB 163; Parker v SER (1877) 2 CPD 416; Spurling v Bradshaw [1956] 1
WLR 461; Chapleton v Barry UDC [1940] 1 KB 532; Andrews v Singer Co [1934] 1
KB 17; Ailsa Craig v Malvern Fishing Co [1983] 1 WLR 964; Canada Steamship v R
[1952] AC 192; R&B Customs v UDT [1988] 1 WLR 321; George Mitchell v Finney
Lock Seeds [1983] 2 AC 803; Smith v Eric Bush [1990] 1 AC 831; OFT v Abbey
National [2009] UKSC 6.
Common errors
Failing to identify the breach for which Rides are trying to limit liability. Failing to
fully consider the common law mechanisms of dealing with exclusion or limitation
clauses. Failing to consider the construction tests, when this term was very broad.
Not explaining how the principles of unreasonableness under UCTA were applied. It
is not a stand-alone requirement but needs to be established in tandem with other
sections of UCTA. Failing to consider the Regulations.
A good answer to this question would…
Deal logically with the answer, identify the breach and then apply the common law
principles of incorporation and construction to the facts. Then after fully discussing
this with reference to relevant case law, apply UCTA and UTCCR.
Poor answers to this question…
Failed to use the relevant cases to support the arguments on incorporation, some
failing to consider the common law rules at all. Some candidates failed to consider
any relevant construction arguments despite the vague nature of the limitation
clause. Some candidates also just applied the reasonableness test under UCTA

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 Examiners’ report 2014

without explaining how they reached s.11. The test of reasonableness is not a
stand-alone section, it is related to attempts to exclude liability under ss.2,3, etc.

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 Examiners’ reports 2015

Examiners’ reports 2015

LA1040 Elements of the law of contract – Zone A

Introduction
A key requirement in examinations is to read the question carefully and identify the
relevant issue being examined. The questions are designed to allow you to
demonstrate your knowledge and understanding in relation to specific issues.
Although there may be some overlap, there are no two questions on the same topic.
There are no trick questions, so ask yourself ‘why have the examiners told me this,
what legal issues are raised on these facts?’ Knowing the facts of the cases helps
you to identify the areas of law, but remember you are not required to repeat the
detailed facts of cases in your answer.
There are certain errors which occur in most examination sittings. One is a failure to
identify the correct area of law; this may arise from a failure to actually read the
rubric and understand who is being advised (see specific comments below).
Another is answering two questions on the same topic; it is highly unlikely that there
will be two questions on the same topic, as explained above, so read the questions
carefully to see the clues that there are in the question to help focus the answer. If
the subject guide has been followed and the activities undertaken this should help
you identify the facts which raise certain legal issues, and then the appropriate
response.
You must use relevant authority to support your arguments. If your answer contains
no authority, you cannot gain credit for the required knowledge which needs to be
evidenced in the answers. Using no specific cases but saying ‘there is a decided
case’ will also gain little credit; in a common law system there will be cases on most
issues covered, so this is not showing knowledge of cases.
Avoid just writing all you know on a particular area, whether relevant to the question
or not, then ‘applying the law’ in a short paragraph. This displays a lack of
understanding of the relevant law. It can also lead to repetition, which will use up
valuable time. You must apply the relevant law to the facts. Remember, you are
asked to advise a person on the given facts. So using the relevant law is essential.
You should plan your answer based on the relevant facts and think logically about
the demands of the facts. In problem questions, advise each party separately to
help to keep the answer logical. In essays, remember to formulate an answer that
actually addresses the question posed. Do not be tempted to write the answer to a
question you wish had been asked, or a prepared answer to a question which has
appeared in the past. This will gain little credit, if any, as the essay requires a critical
approach to the issue based on the question posed.
Make sure you plan your time in the examination well to avoid having three good
answers and a weak or non-existent fourth answer. In an age of electronic writing it
may help you to practice writing timed answers in long hand. This will pay dividends
in the final examinations.

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LA1040 Elements of the law of contract

Comments on specific questions

Question 1
‘We should emphasise that we do not wish our proposed legislation…to
hamper the judicial development of third party rights.’ Law Commission
Report 1996 (para 5.10)
Critically evaluate the success of the Law Commission’s aims in light of the
above statement.
General remarks
This is a question in relation to the doctrine of privity. It asks you to critically
consider the law in this area. It requires a knowledge of the attack on privity by the
courts and how the legislation has impacted on this move, to the benefit or
detriment of the position of third parties.
Law cases, reports and other references the examiners would expect you to
use
Contract (Rights of Third Parties) Act 1999; Tweddle v Atkinson (1861) 1 B&S 393;
The Eurymedon [1975] AC 154; Darlington v Wiltshier Northern [1995] 1 WLR 68;
Dolphin Maritime v Sveriges [2009] EWHC 716; Nisshin Shipping v Cleaves [2003]
EWHC 2602; Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1
AC 85; Alfred McAlpine Construction Ltd v Panatown Ltd (1998) 58 Con LR 46;
Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518; Law
Commission Report 1996.
Common errors
Merely reciting the cases in relation to the privity of contract. Then listing the
changes made by the Contract (Rights of Third Parties) Act 1999 with no
commentary.
A good answer to this question would…
understand the increasing momentum for change to the doctrine of privity being led
by the courts, with close reference to case law. Understand the Law Commission
motivation for change and the response of the courts in the immediate wake of the
Contract (Rights of Third Parties) Act.
Poor answers to this question…
merely outlined the cases that illustrated the application of the doctrine of privity and
then listed the rights and limits of the Act.
Question 2
Alex, a builder, requires a crane for a building project. Alex negotiates with
Mehmet, a supplier of building machinery, to hire all his building machinery
including the crane. During the negotiations Mehmet states that he can
supply all Alex’s crane needs for the project, including the DC100 crane
which can carry a weight of up to three tonnes. Mehmet has checked the
tonnage capacity of the DC100 both in the crane’s manual stored in his office
and in the online register. Both confirm that the DC100 is suitable for Alex’s
requirements. Alex’s surveyor has also quickly checked the manual and sees
that it is suitable. A week before the contract is agreed Mehmet receives an
email from the manufacturer with the subject heading ‘DC100 tonnage: error
in manual’s tonnage capacity’. He does not bother to read the email. This
email would have told Mehmet that the carrying capacity was only one tonne.
Alex decides to hire his machinery from Mehmet; he is especially pleased that
Mehmet offers him a 10% discount on the hire. Nothing in the written contract

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refers to the weight capacity of the DC100. However, when using the DC100 to
lift two tonne concrete blocks, the crane is unable to support the weight and
drops one of the concrete blocks, which crashes into the roof of the building,
a specially commissioned stained glass worth £1 million. Alex has to halt his
building project whilst he waits for a new glass panel to be delivered. As a
result, he is extremely late on completing the project and makes a loss of
£1,200,000. His delay also means that the main contractor does not hire him
for a subsequent project. This would have resulted in a £40,000 profit for
Alex. Alex discovers that the DC100 only has a weight capacity of one tonne
and wishes to sue Mehmet.
Advise Alex.
General remarks
This question concerns misrepresentation. You should discuss whether the
statement about tonnage is a representation or a term. Facts suggest that it is more
likely to be a representation as the question states that there was nothing in the
contract in relation to this matter. The negotiations are for machinery generally, and
there are other issues which seem to be part of the contract. You may conclude that
it is a term, which means that you may address this. Some credit can be given but it
is clear on the facts that the written contract does not include this statement. This is
the central issue for examination. Also, as the damages may be too remote for
contract damages it may be preferable to bring a claim in misrepresentation.
You should first establish that representation is an actionable misrepresentation
before discussing the nature of that misrepresentation and the relevant remedies. It
is a statement of fact, which is false. There should be discussion of inducement, as
it may be the statements of Alex’s surveyor or the discount that acts as an
inducement rather than the weight capacity. It need not be the sole inducement.
There is no requirement for Alex to check the weight capacity but it seems that he
did make some effort to do so, which should be considered as a central argument to
suggest that it was not an inducement. You should then consider the type of
misrepresentation that may have arisen: perhaps a fraud, but in that case the
burden remains with Alex, so it is better to look at the Misrepresentation Act 1967.
In looking at the cause of action under s.2(1) of the Misrepresentation Act, you
should consider whether Mehmet had reasonable grounds to believe that the
statement was true, and in doing so, consider the case of Howard Marine v Ogden
and whether the facts here are distinguishable. Under the Act the burden has
shifted to Mehmet, and it is a high burden. Regarding remedies under s.2(1), you
should discuss the case of Royscott v Rogerson and the significance of this case as
to the question of foreseeability.
Law cases, reports and other references the examiners would expect you to
use
Dimmock v Hallett (1866) LR 2 Ch App 21; Bisset v Wilkinson [1927] AC 177;
Esso v Marden [1976] QB 801; Edgington v Fitzmaurice (1885) 29 Ch D 459;
Museprime v Adhill (1991) 61 P&CR 111; Derry v Peek (1889) 14 App Cas 337;
Howard Marine v Ogden [1978] QB 574; Hedley Byrne v Heller [1964] AC 465;
Royscott v Rogerson [1991] 2 QB 297; Misrepresentation Act 1967, s.2(1); East v
Maurer [1991] 1 WLR 461.
Common errors
Focusing on the possibility of a term when careful attention to the question should
indicate that a misrepresentation was the better option for a claim. Failure to fully
consider if the statement was actionable before moving on to consider the type of
misrepresentation that it could be. Failure to clearly consider the relevant remedies
available.

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LA1040 Elements of the law of contract

A good answer to this question would…

take a logical approach to the issues, with close reference to relevant common law
authority with clear application of the facts to the principles from those cases.
Carefully consider the remedies available for the misrepresentation.
Poor answers to this question…
merely recited all the candidate’s knowledge in relation to contractual terms and
misrepresentations without any attempt to apply this to the given facts. Failing to
use cases to a sufficient level to develop a full argument.
Question 3
In November 2014, Lottie booked a holiday to do a bungee jump and sports
activity based adventure in March 2015. The cost of the holiday was £1,100.
Lottie paid £100 deposit with the remaining £1,000 to be paid in two
instalments; £500 on 28 February, one month before the holiday, and £500
upon arrival. On 21 February, five weeks before the holiday, Lottie discovers
that the bungee jump has been cancelled and so Lottie calls to cancel the
holiday. The Adventure Centre tell Lottie that there are still all the other
activities available and they will keep her place open and expect full payment.
Lottie is very annoyed but, on reflection, she decides she will go. She makes
the payment of £500 on 28 February.
On 26 March, two days before Lottie’s holiday is due to start, the Adventure
Centre is hit by food poisoning and is closed for inspection. It is discovered
that the poisoning is due to contaminated milk being sent from the
manufacturer and used in the puddings.
Advise Lottie on any claims.
How would your answer be different if the food poisoning was caused by the
chef storing the butter uncovered on the same plate as raw meat?
General remarks
This question involves issues of repudiatory breach and frustration. Lottie has a
contract, which she will try to say was frustrated when the Adventure Centre failed
to provide a part of the contract which she particularly wanted to enjoy. This is
unlikely to be frustration and you should point out the narrow nature of the doctrine
with a clear definition of what amounts to frustration of a contract. You should
explain that when Lottie tried to cancel it would be unlikely on this basis that she
could claim frustration as she still had largely what she contracted for, with
reference to relevant case law. So, in fact, she was possibly falling within the
principle of anticipatory breach as she is saying she will not attend as expected,
which the Adventure Centre have rejected; so the problem here is that the
obligations remain on both sides. When the Adventure Centre later cancel due to
the food poisoning they may be in breach. You should then consider if this is
frustration. You should explain the impact of frustration; with reference to the total
failure consideration compared to the Chandler v Webster principle and the Act.
The alternative scenario is self-induced so this would be a breach and the remedies
would not be in frustration.
Law cases, reports and other references the examiners would expect you to
use
Paradine v Jane (1646) Al 26; Taylor v Caldwell (1863) 3 B&S 826; Krell v
Henry [1903] 2 KB 740; Herne Bay v Hutton [1903] 2 KB 683; Super Servant Two
[1989] 1 Lloyd’s Rep 148; Chandler v Webster [1904] 1 KB 493; Fibrosa v Fairbairn
[1943] AC 32; National Carriers v Panalpina [1981] AC 675; Law Reform

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(Frustrated Contracts) Act 1943; Hadley v Baxendale (1854) 9 Exch 341. Hochster
v De La Tour (1853) 2 E&B 678; White & Carter (Councils) Ltd v McGregor [1962]
AC 413.
Common errors
Dealing with this only as a breach of contract or only seeing the possibility of
frustration. This error is a problem that results from revising the law in parts, rather
than as a whole, and not seeing where topics in the course can be connected.
A good answer to this question would…
deal with the issues logically in relation to the cancellation of part of the holiday and
Lottie’s response to this. Then consider clearly that if there is no frustration the
remedies for breach may be limited and that Lottie may be in breach herself. She
could not get a refund if she did not attend. Then consider the liabilities remaining:
the subsequent food poisoning being a frustrating event and the consequences.
Then consider clearly the alternative scenario.
Poor answers to this question…
failed to see that this was a frustration question, despite the clues in the question, of
unforeseen events and then an alternative situation which suggested the event was
self-induced.
Question 4
Seema places an advert in her local shop window, ‘Five goblets for sale: each
£10. Available only to the first five people who pay me this amount by
Saturday 1st May’.
Ali sends Seema £10 in the post on Tuesday 27th April and says he will collect
one goblet on Monday 3rd May. The letter gets lost in the post.
In the morning of Thursday 29th April Chet telephones Seema and asks if he
can buy two goblets for £15. Seema says she needs time to think about this
and Chet tells her to let him know by Saturday at 10am. On Thursday evening
Seema calls Chet and leaves a message on his answering machine saying, ‘I
agree you can have two goblets for £15.’ Chet does not hear the message
until Saturday morning.
Being disappointed by the response to the advert, Seema decides to place the
remaining three goblets in an auction on Friday 30th April. Seema places a
note in her window stating that the goblets are no longer for sale and that
they are going to auction.
Chet attends the auction and is delighted to see the goblets for sale. He
makes a successful bid and buys the three for £15. He sees Eduord, Seema’s
partner, at the auction and says ‘What a bargain I’ve got! I’m glad that Seema
didn’t respond to my telephone call’. Eduord calls Seema immediately. She is
furious as she was keeping two goblets for Chet. In anger she takes two
goblets to a charity shop on Friday evening.
Having seen the advert Diego arrives at Seema’s house on Saturday morning
with £10 and is very annoyed to see the note as he planned to give a goblet to
his mother as a present. Ali arrives on Monday to collect his goblet.
Advise Seema.
General remarks
This is a question in relation to agreement. You should begin by establishing the
nature of the advertisement, with close reference to relevant authority. Specifically,
with the certainty issue being discussed and the comments by Parker CJ in Fisher v

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LA1040 Elements of the law of contract

Bell. Good answers would make reference to this being a unilateral offer with
reference to Lefkowitz v Great Minneapolis Stores. If this is a unilateral offer then a
revocation would need to follow the principles of Shuey v USA. This case should be
read carefully, as the method was not exactly the same.
Seema v Ali – if the advert is a unilateral offer then this can be acceptance. You
should explain the general rules in relation to acceptance and then the postal rules,
with close reference to authority. These rules apply even if the post is lost, although
it may be that Seema has required the communication to actually reach her by the
use of the words ‘pay me’. In which case there is no contract with Ali.
If the advert is an invitation to treat then this is an offer which was not
communicated, as postal rules only apply to acceptance and not offer.
Seema v Chet – if the advert is an offer then this communication is a counter offer,
which Seema needs to accept. The original offer is ended. Seema now needs to
communicate acceptance – which is not done until Chet actually receives the
acceptance. Discuss the general rules of communication; if this were a commercial
context could we argue that the communication is when Chet should have heard
the acceptance? This is unlikely in this context. Chet then buys the three goblets at
the auction, which was not contentious, and tells Eduord that he no longer wants
the two goblets from Seema. Eduord serves to raise the issue of communication of
revocation of offer: can it be by a third party and is Eduord able to communicate it?
Reference should be made to Powell v Lee, Dickinson v Dodds.
If the advert is an invitation to treat then this is just a straightforward offer and the
same applies to communication.
Seema v Diego – if the advert is an offer then Diego is trying to accept as
prescribed. He arrives, sees the note, this is actual communication of revocation so
there is no need to apply Shuey but credit would be given for explaining how it
would operate. Can Seema revoke when Diego has begun to perform and is willing
to perform? See Errington v Errington-Woods.
If the advert is an invitation to treat then he is making an offer which she can reject.
Law cases, reports and other references the examiners would expect you to
use
Partridge v Crittenden [1968] 1 WLR 1204; Carlill v Carbolic Smoke Ball Co [1893]
1 QB; Hyde v Wrench (1840) 3 Beav 334; Entores v Miles Far East Corp [1955] 2
QB 327; Thomas v BPE Solicitors [2010] EWHC 306; Brinkibon v Stahag Stahl
[1983] 2 AC 34; Adams v Lindsell (1818) 1 B & Ald 681; Korbetis v Transgrain
Shipping [2005] EWHC 1345 (QB); Henthorn v Fraser [1892] 2 Ch 27; Dickinson v
Dodds (1876) 2 Ch D 463; Routeledge v Grant (1828) 4 Bing 653; Errington v
Errington-Woods [1952] 1 KB 290.
Common errors
Failure to use authority in answers. This cannot gain credit as you are required to
refer to relevant cases. With this area you should always consider the alternative
issue: what would be the results if the postal rule did apply and if it didn’t apply?
A good answer to this question would…
take the issues logically and clearly set out which parties were being advised. A
good answer would deal with the facts clearly, such as noting that Seema’s words
in the advert required the money to be paid to her, suggesting that the postal rules
would not apply.

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Poor answers to this question…

failed to address the facts as given and dealt with the issues without reference to
authority. Some candidates who knew the authority made no attempt to apply it to
the facts.
Student extract
The first issue is if the advertisement posted by Seema is an offer. There is a
general rule for the advertisement states that all advertisements should be
treated as an invitation to treat as to protect the person who is placing the
advertisement from incurring any liability in response to the ones who wish to
purchase the goods from him. The leading case for this principle is Partridge
v Crittenden, stating the general rule for advertisements indeed apply to this
case. However, there is an exception which can be seen in the case of Carlil
v Carbolic Smoke Ball Company as it identifies that the advertisement has
constituted an offer to the company who places this advertisement as it is an
unilateral contract and there is a definite intention to create a contract.
Therefore based on the advertisement given the sentence that ‘available only
to the first five people who pay me this amount by Saturday 1st May’ has
given rise the definite intention to bind the contract with the first five persons
paying £10 for each goblet.
Comment on extract
The candidate has begun with the facts of the problem, which is a good start and
the rule is stated clearly. It would be useful if they had explained what an invitation
to treat is, as this is a term of art. What is good in this response is that they have
explained the reasoning for the general rule, then supported this with a case. They
have then moved on to the exception, a unilateral offer. This point could be
developed by explaining how this differs from an invitation to treat, and by giving a
clear definition of an offer. What is particularly good here is the application of the
facts, a direct reference to the sentence in the given facts which the candidate feels
is evidence of the true intention of Seema. Although there is room for improvement
in this opening paragraph there is a good deal to credit in the technical ability to
explain the law.
Question 5
‘It would seem that the courts are intent on preserving to themselves a degree
of remedial flexibility and the measure of recovery in any particular case may
therefore be a matter of some uncertainty.’ (McKendrick, Contract Law)
Explain and critically evaluate how damages are assessed by the courts in
light of the above statement.
General remarks
Here the focus is on the various measures of damages. There may be some
descriptive element but you should critically consider the inclusion of restitution and
consumer surplus in a discussion of the more general measures of expectation and
reliance. You could usefully consider the equitable remedies.
Law cases, reports and other references the examiners would expect you to
use
Robinson v Harman (1848) 1 Ex 850; Ruxley Electronics v Forsyth [1996] AC 344;
Hadley v Baxendale (1854) 9 Exch 341; Farley v Skinner [2001] UKHL 49; Jarvis v
Swan’s Tours [1973] QB 233; Anglia Television Ltd v Reed [1972] 1 QB 60; AG v
Blake [2001] 1 AC 268; Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All
ER 830.

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LA1040 Elements of the law of contract

Common errors
Some candidates merely recited all they knew in relation to damages, or dealt with
this as a misrepresentation question.
A good answer to this question would…
compare and contrast the cases in relation to the measure of damages and how the
courts try to maintain consistency in their approach while dealing with the issue of
true compensation. There is no set answer, some candidates used a discussion of
equitable remedies to illustrate the exercise of judicial discretion. Other good
answers focused on the introduction of restitutionary damages for contract.
Poor answers to this question…
merely recited cases in relation to damages with no effort to address the question.
An essay requires you to consider how to formulate an argument to respond to the
question.
Question 6
Roger has a food catering business and has agreed with Dawn, the manager
at Nippers Nursery, to supply lunches for the nursery children for a period of
one calendar year. He is to be paid £2,000 per month, a price that reflects
providing a main course and dessert for each child daily. Unfortunately, due
to increased electricity costs, Roger finds himself in financial difficulty. He
says to Dawn: ‘Unless you increase my monthly fee to £2,500 I will not be
supplying any desserts as part of the lunchtime meal for the children.’ Dawn
is disappointed as Roger’s desserts are far healthier than the desserts of his
competitors. She believes that a more healthy option will result in positive
reviews of the nursery and thereby increase her funding from the
government. She agrees to the price rise.
Roger buys his food supplies from Amy. However, his recent financial
problems have made it difficult for him to pay Amy and he is £3,000 in debt.
Amy is in love with Roger and says to him: ‘Don’t worry, just pay me £500 and
we can forget about the rest.’ Roger pays the £500. He is delighted and he
books tickets for him and his new girlfriend, Kate, to go away on holiday
together.
Both Amy and Dawn hear about Roger’s impending holiday with Kate. Dawn
refuses to pay him the extra monthly fee and Amy demands the full
repayment of the debt.
Advise Roger.
General remarks
This is a question about consideration. It would be useful to give a very short
definition of consideration, with reference to relevant case law, but this should not
be a long essay on all the issues on consideration as this is not the best style of
answering a problem question.
Roger v Nippers – you should first discuss, using relevant case law, whether there
is consideration for the promise by Dawn to pay more. You could explain the
general rule from Stilk v Myrick and perhaps compare to when there is anything
extra given, as in Hartley v Ponsonby. Then consider if the principles of Williams v
Roffey apply. This is a contract for services, and Roger is not going to perform the
service which Nippers has agreed to pay more for. There may be some practical
benefit, in getting positive reviews of the nursery. Would it be possible for Dawn to
raise the issue of economic duress here? There is enough to suggest this.

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Roger v Amy – this is a contract for debts, you may consider if Williams v Roffey
applies to this type of contract but should reject this in light of the comments in Re
Selectmove. Therefore, consider whether Amy’s promise to accept less money is
enforceable or if there is lack of consideration for the promise (Foakes v Beer). You
should also discuss the doctrine of promissory estoppel, including whether there
was reliance on the promise to accept less. If so, then can Amy go back to her legal
rights subject to reasonable notice?
Law cases, reports and other references the examiners would expect you to use
Currie v Misa (1875) LR 10; Stilk v Myrick (1809) 2 Camp 317; Hartley v Ponsonby
(1857) 7 E&B 872; Williams v Roffey Bros [1991] 1 QB 1; Foakes v Beer (1884) 9
App Cas 605; Pinnel’s Case (1602) 5 Co Rep 117a; Re McArdle [1951] Ch 669;
Pao On v Lau Yiu Long [1980] AC 614; CLP v High Trees House [1947] KB 130.
Common errors
Failure to consider all the elements of Williams v Roffey and only considering either
duress or practical benefit. Logically, if there were duress, which could set aside a
contract, there would need to be a contract to set aside. So to focus on this was
illogical. Failure to see the limit of Williams v Roffey in relation to Roger v Amy.
A good answer to this question would…
explain very briefly, with reference to relevant case law, what consideration is and
then begin to give advice directly. Break down the relevant issues of the principles
of the cases and reach a conclusion on those principles.
Poor answers to this question…
recited all the candidate knew in this area or failed to address the facts given in the
question in relation to the relevant law.
Question 7
Agatha telephones Brian to order a ‘Betahouse’ food blender, the latest
device for perfect baking. Brian mishears this and thinks she wants a
‘Bekahaas’, the standard blender. Brian tells Agatha that he has one for £200
and Agatha is delighted at this price as this is much less than the normal cost
of a ‘Betahouse’ blender, which is £800. She tells Brian to put it aside for her
and she will be in at 5pm that day to collect it.
Later Agatha, who runs a shop selling antiques, receives a telephone call
from someone claiming to be Polly Petty, a famous antiques collector and
television celebrity and the host of a television programme about antiques.
‘Polly Petty’ asks if Agatha’s wonderful Russian Blue clock is for sale as she
would like to buy it to make an episode of her television show about it.
Agatha is very flattered and delighted as ‘Polly Petty’ is willing to pay top
price. In fact, ‘Polly Petty’ is a rogue called Hetty.
When ‘Polly Petty’ arrives Agatha is so star struck that she asks for publicity
shots to be taken, which Polly happily agrees to. Agatha loads the clock into
Polly’s car and then Polly produces her cheque book. Although Agatha is
reluctant to take a cheque for such a large amount she does not want to miss
the opportunity for such good publicity.
Agatha then arrives at Brian’s shop and discovers that a Bekahaas has been
set aside for her and she refuses to accept it. Then later, at the bank she
discovers that the cheque is a forgery. On the way home she sees her
Russian Blue clock in Zayn’s second hand shop. She goes in and demands
he return it to her.
Advise Agatha.

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LA1040 Elements of the law of contract

General remarks
The issue here is mistake. Briefly explain the consequence of mistake on a contract
– making it void and not voidable.
Agatha v Brian – mistake which was mutual at cross purposes. It could be argued
that she snatched at a bargain as the price was considerably lower, with reference
to relevant case law. Generally, a discussion of the requirements of mistake here is
relevant.
Agatha v Zayn – there is clearly a fraud by Polly but as she has disappeared this is
of no use, so you should not focus on misrepresentation. This would only make the
contract voidable and on the facts the property had been sold to Zayn before
Agatha realised the deceit. Misrepresentation makes the contract voidable so Zayn
obtained good title if there was a contract. To have a claim against Zayn then she
must prove that he never obtained good title, as there was no contract between
Agatha and Polly. Then unilateral mistake to identity: was it a fundamental mistake
or just as to finances? This should include a discussion of distance or face to face
contract.
Law cases, reports and other references the examiners would expect you to
use
Smith v Hughes (1871) LR 6 QB 597; Raffles v Wichelhaus (1864) 2 H&C 906;
Shogun Finance v Hudson [2003] UKHL 62; Cundy v Lindsay (1878) 3 App Cas
459; Phillips v Brooks [1919] 2 KB 243; Ingram v Little [1961] 1 QB 31; Bell v Lever
Bros [1932] AC 161; Leaf v International Galleries [1950] 2 KB 86; Great Peace
Shipping v Tsavliris [2002] EWCA Civ 1407.
Common errors
Only dealing with misrepresentation, which, on a clear understanding of the
principles, would not have helped in a claim against Zayn. Also, there was no issue
of the Sale of Goods Act, as Brian did not make any guarantees as to the blender.
There was a misunderstanding.
A good answer to this question would…
understand the issues which were relevant and what Polly would need to do to
avoid the contractual obligation to buy the blender and recover the property from
Zayn.
Poor answers to this question…
failed to spot the issues in the question, only dealing with misrepresentation, which
shows a lack of understanding as to the consequences of both misrepresentation
and mistake.
Question 8
Simone has a dairy farm business and attends a meeting with Rita, the
manager at Freshco, a large national supermarket to whom Simone wishes to
sell her milk. Rita is impressed by Simone and wants to do business with her.
Rita agrees to contract with Simone for a period of six months. She hands
Simone the standard Frescho order form which details the quantity of milk
Simone is required to supply each week and the dates on which it is to be
delivered to the supermarket. Simone is thrilled to have this business
opportunity and signs the order form immediately. Unbeknown to her, on the
back of the order form, in very small print, it reads:
Clause 1.1 ‘Freshco reserves the right to cancel the order at any time.’

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Cause 1.2 ‘Freshco limits its liability for any damage whatsoever and
howsoever caused in the performance of its contractual
obligations to £100.’
After two weeks, Simone receives a telephone call from Polly telling her that
Freshco wishes to cancel all future orders with immediate effect. Simone is
extremely upset and slams the phone down. Rita decides to drive over to
Simone’s farm to check that she is alright. As she arrives, however, her car
slips in the mud and crashes into Simone’s barn, causing £5,000 worth of
damage.
Advise Simone.
General remarks
This question deals with the incorporation of terms into a contract, whether the
terms are applicable to the circumstances that have arisen and the statutory
regulation of the terms. To begin, you could identify the issues facing Simone: the
cancellation of the contract and the damage to her barn.
You should first discuss whether terms have been incorporated into the contract.
Most relevant here is whether the document (order form) is one which could be
expected to have contained contractual terms. As the form has been signed it may
be difficult to deny incorporation but reference can be made to the onerous nature
of the terms and if this requires further steps to be taken by Rita, on behalf of
Freschco, to bring this to Simone’s notice. It could be useful to point out that as they
are both business people this will be difficult for Simone to argue.
If incorporation can be established you would need to discuss whether the terms
cover the breaches that arose – particularly relevant here is whether Rita was
acting ‘in the performance of contractual duties’ when she damaged the barn, as
clause 1.2 specifically refers to liability arising in those circumstances. This point
was rarely noted by candidates, who instead focused on the wide nature of the
terms, ‘whatsoever and howsoever’ as part of the construction argument. Statutory
control over terms must then be examined. Since Simone is not a consumer only
UCTA is relevant and candidates should be able to examine the applicability of
s.3(2)(b)(i) and associated case law as well as s.2(2) and s.11 (in the event that
circumstances of accident might be held to fall within exclusion clause). One key
issue was that UCTA only covers attempts to exclude or limit liability for a breach
and therefore does not directly cover clause 1.1.
Law cases, reports and other references the examiners would expect you to
use
Unfair Contract Terms Act 1977; L’Estrange v F Graucob Ltd [1934] 2 KB 394;
Thornton v Shoe Lane Parking [1971] 2 QB 163; Parker v SER (1877) 2 CPD 416;
Spurling v Bradshaw [1956] 1WLR 461; Chapleton v Barry UDC [1940] 1 KB 532;
Andrews v Singer Co [1934] 1 KB 17; Ailsa Craig v Malvern Fishing Co [1983] 1
WLR 964; Canada Steamship v R [1952] AC 192; R&B Customs v UDT [1988] 1
WLR 321; George Mitchell v Finney Lock Seeds [1983] 2 AC 803; Smith v Eric
Bush [1990] 1 AC 831.
Common errors
Failure to address the common law clearly and to move directly to the statutory
provisions. In relation to the statutory provisions many candidates broadly applied
UCTA to clause 1.1 when this is not an exclusion clause. Also, some candidates
just considered s.11 UCTA on reasonableness rather than explaining how this
section could be used. It is not a standalone section and you can only apply this via
sections such as s.2 and s.3.

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LA1040 Elements of the law of contract

A good answer to this question would…

identify the issues facing Simone and clearly deal with the common law before
moving to the relevant statutory provisions, perhaps with a line saying why UTCCR
does not apply.
Poor answers to this question…
failed to deal with the issues logically or to deal with the common law. Although this
may seem irrelevant in practice, as the legislation covers so much, it has limitations.
For example, the limits of UCTA for clause 1.1 and how to use the common law in
this area. Again, many candidates failed to refer to the wide range of relevant cases
in this area.
Student extract
Clause 1.1 Freshco reserves the right to cancel order at any time.
The contract was made and Simone has been abiding to the contract. There
appears to be no breeches [sic] by Simone. As such, it is unfair for Freshco
to cancel the order without any valid reasons. The clauses inserted states the
right to cancel order. This is however, not standing due to infringement of
Unfair Contract Terms Act 1977. Freshco has no right to terminate the order.
It is an implied term that repudiating of contract can only occur when there is
obvious breeches [sic] of contract. As such, Simone can sue on an Unfair
Contract Terms Act 1977.
Comment on extract
The candidate began directly with the first clause, which is good to get to the facts
but you should identify the key issue, reliance on contractual terms and their
incorporation and then the parties. The candidate is right on what clause 1.1 covers
and immediately asserts that this is unfair. There is no general requirement for
contract terms to be fair, consider the principles of freedom of contract which are
central to contract law, especially between businesses. The candidate then refers to
UCTA, which does not directly cover this type of clause. The application of UCTA to
all clauses is a common error, the Act only applies to attempts to exclude or limit
liability for breach. The candidate then seems to suggest that there are implied
terms as to when a contract can end, this is incorrect.
Although the candidate has a grasp of the basics, and uses language of contractual
nature, there is no discussion of the common law rules of incorporation and
construction which are the only method to use here to help Simone in any claim.

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 Examiners’ reports 2015

Examiners’ reports 2015

LA1040 Elements of the law of contract – Zone B

Introduction
A key requirement in examinations is to read the question carefully and identify the
relevant issue being examined. The questions are designed to allow you to
demonstrate your knowledge and understanding in relation to specific issues.
Although there may be some overlap, there are no two questions on the same topic.
There are no trick questions, so ask yourself ‘why have the examiners told me this,
what legal issues are raised on these facts?’ Knowing the facts of the cases helps
you to identify the areas of law, but remember you are not required to repeat the
detailed facts of cases in your answer.
There are certain errors which occur in most examination sittings. One is a failure to
identify the correct area of law; this may arise from a failure to actually read the
rubric and understand who is being advised (see specific comments below).
Another is answering two questions on the same topic; it is highly unlikely that there
will be two questions on the same topic, as explained above, so read the questions
carefully to see the clues that there are in the question to help focus the answer. If
the subject guide has been followed and the activities undertaken this should help
you identify the facts which raise certain legal issues, and then the appropriate
response.
You must use relevant authority to support your arguments. If your answer contains
no authority, you cannot gain credit for the required knowledge which needs to be
evidenced in the answers. Using no specific cases but saying ‘there is a decided
case’ will also gain little credit; in a common law system there will be cases on most
issues covered, so this is not showing knowledge of cases.
Avoid just writing all you know on a particular area, whether relevant to the question
or not, then ‘applying the law’ in a short paragraph. This displays a lack of
understanding of the relevant law. It can also lead to repetition, which will use up
valuable time. You must apply the relevant law to the facts. Remember, you are
asked to advise a person on the given facts. So using the relevant law is essential.
You should plan your answer based on the relevant facts and think logically about
the demands of the facts. In problem questions, advise each party separately to
help to keep the answer logical. In essays, remember to formulate an answer that
actually addresses the question posed. Do not be tempted to write the answer to a
question you wish had been asked, or a prepared answer to a question which has
appeared in the past. This will gain little credit, if any, as the essay requires a critical
approach to the issue based on the question posed.
Make sure you plan your time in the examination well to avoid having three good
answers and a weak or non-existent fourth answer. In an age of electronic writing it
may help you to practice writing timed answers in long hand. This will pay dividends
in the final examinations.

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LA1040 Elements of the law of contract

Comments on specific questions

Question 1
‘Clearly the third party cannot qualify as a plaintiff under the bargain theory.
He has suffered no detriment at the request of the promisor.’
Critically evaluate the principles of privity of contract.
General remarks
This is a question in relation to the doctrine of privity. It asks you to critically
consider the law in this area. It requires a consideration of the origins of the
principle, the limitation of the burden in contractual arrangements and whether this
was – and still could be – justified.
Law cases, reports and other references the examiners would expect you to use
Contract (Rights of Third Parties) Act 1999; Tweddle v Atkinson (1861) 1 B&S 393;
The Eurymedon [1975] AC 154; Darlington v Wiltshier Northern [1995] 1 WLR 68;
Dolphin Maritime v Sveriges [2009] EWHC 716; Nisshin Shipping v Cleaves [2003]
EWHC 2602; Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1
AC 85; Alfred McAlpine Construction Ltd v Panatown Ltd (1998) 58 Con LR 46;
Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518; Law
Commission Report 1996.
Common errors
Merely reciting the cases in relation to the privity of contract. Then listing the changes
made by the Contract (Rights of Third Parties) Act 1999 with no commentary.
A good answer to this question would…
critically consider the cases and their origins. A good answer would take a view of
whether the origins of the principle are justified. The creation of certainty in
contractual obligations has advantages but as exemplified in classic cases this can
cause hardship and defeat the intention of the parties.
Poor answers to this question…
failed to address the critical basis of the principle and merely repeated the facts of
earlier cases and then the changes brought about by the legislation.
Question 2
Claudine is a builder and requires materials for a conservatory roof she is
building. She is informed by Roofit & Co that they can provide the materials
and suggest that Claudine use glass incorporating the latest technology: glass
that is only 5mm in thickness but which provides all the heat and security
benefits of glass that is 50mm in thickness. In order to ensure that this glass is
appropriate for the conservatory roof, Claudine telephones the glass
manufacturers, Pilkers Ltd, and their salesman confirms its suitability. Roofit &
Co possess the most recent manual for this type of glass which notifies the
reader that this glass is not suitable for conservatory roofs. However, Roofit &
Co have never read this manual. Claudine also has a copy of this manual but
has never read it either. Claudine is impressed by this type of glass and
decides to order all her materials from Roofit & Co, who offer her a 20%
discount for a bulk order. However, after fitting it to the roof, a bird sits on the
glass and the glass shatters into pieces, falling onto Claudine and injuring her
badly. She is prevented from working for six months and her customer refuses
to pay. This leads to Claudine losing a lucrative contract and future business.
Advise Claudine on her claim against Roofit & Co.

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 Examiners’ reports 2015

General remarks
This question concerns misrepresentation. You should discuss whether the
statement about glass is a representation or a term. There are some clues that this
is not a term; some credit would be given if you felt it was a term but the fact that
the statement was made before the contract was entered into, that it was only a
suggestion and that Claudine verified the details herself suggest that it is more likely
to be representation. You need to establish that the representation is an actionable
misrepresentation, with close reference to relevant authority, before discussing
remedies. The statement is an unambiguous and false statement of fact. It seems
to have induced the contract (Claudine’s checking, the statements with Pilkers).
You should note that it need not be the sole inducement but can be one of them.
There is a good deal to discuss in relation to this inducement being material.
Claudine was offered a discount, she verified the details herself, she could check
for herself. Good answers would use these facts to make a solid argument.
Once an actionable misrepresentation is established then the next stage is to
decide on the nature of the misrepresentation. It may be a fraud but you should
explain the disadvantages (the heavy burden of proof on Claudine) and the
advantages (no possible claim for contributory negligence). The next logical step
would be to consider the Misrepresentation Act 1967. The advantage is that the
burden of proof shifts to Roofit. In looking at an action under s.2(1) you should
consider whether Roofit had reasonable grounds to believe that the statement was
true, and in doing so, consider the case of Howard Marine v Ogden and whether the
facts here are distinguishable.
Insofar as remedies under s.2(1), you should discuss the case of Royscott v
Rogerson and the significance of this case as to the question of foreseeability. What
is the significance of Claudine not reading the manual? Might there be contributory
negligence (see Gran Gelato) for a claim here, which is not applicable to a claim in
fraud? There should be a brief mention of the limits of a claim for common law
negligent misstatement and innocent misrepresentation. The remedy of rescission
and its limits should also be mentioned.
Law cases, reports and other references the examiners would expect you to
use
Dimmock v Hallett (1866) LR 2 Ch App 21; Bisset v Wilkinson [1927] AC 177; Esso
v Marden [1976] QB 801; Edgington v Fitzmaurice (1885) 29 Ch D 459; Museprime
v Adhill (1991) 61 P&CR 111; Atwood v Small (1838) 6 CL&F 232; Derry v Peek
(1889) 14 App Cas 337; Howard Marine v Ogden [1978] QB 574; Hedley Byrne v
Heller [1964] AC 465; Royscott v Rogerson [1991] 2 QB 297; Gran Gelato Ltd v
Richcliff (group) Ltd [1992] Ch 560; Misrepresentation Act 1967, s.2(1); East v
Maurer [1991] 1 WLR 461.
Common errors
A failure to use a logical structure and relevant authority. Contract is an area rich in
common law authority, which must be used to establish an argument.
A good answer to this question would…
begin by explaining why the statement as to the glass was a representation and not
a term. Then define misrepresentation before analysing whether the statement met
all the criteria. After establishing an actionable misrepresentation the classification
and relevant remedies for the class of misrepresentation would be dealt with. Good
answers always relate the law closely to the given facts.
Poor answers to this question…
failed to use relevant case authority and to explain all the elements of a
misrepresentation before trying to classify the nature of the misrepresentation.

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LA1040 Elements of the law of contract

Question 3
Hettie bought a ticket to see Les Mondes at the theatre, starring her favourite
actress, Carol Prince. Carol Prince developed a sore throat eight days before
the show and her understudy replaced her in all performances for the next
two weeks. Hettie tried to cancel the cheque she had sent and called the
theatre to explain she no longer needed the ticket as Carol was not
performing. The theatre owner said that they would hold her seat for her
having presented the cheque for payment and no refund would be paid.
However, the night before the show the theatre was flooded when a water
main in the road outside burst and the show was cancelled. The theatre still
refuse to refund her ticket price.
Advise Hettie on any claims she may have against the theatre and any issues
which may arise.
How, if at all, would your answer be different if the flood was caused by the
doorman smoking in the auditorium and being unable to turn off the
sprinklers that were set off by the smoke?
General remarks
This question raises the issues of anticipatory breach and frustration. Hettie entered
into a contract, based on the star of a show. On hearing that the star was not going
to be in the show she tried to end the contract. Hettie may claim that the contract
was frustrated as an essential element of the contract was missing. However, she is
still getting largely what she contracted for (Herne Bay v Hutton). Replacement of
actors is a foreseeable event. So you should explain anticipatory breach, as before
the time for Hettie’s performance she has tried to terminate her obligation. The
theatre can accept this or reject this. Their rejection means that their obligations
also continue.
When the theatre is flooded they have either breached their contract or it has been
frustrated. You should define frustration and point out that here the venue is no
longer available. If this is the case then there is a total failure of consideration so the
common law principle of Fibrosa v Fairbairn will apply. You may briefly compare this
to the alternative principle of Chandler v Webster, but only to explain it being
overruled when there is a total failure of consideration. In that event, the Law
Reform (Frustrated Contracts) Act would be applicable if it is not excluded.
In the alternative scenario, the event would be self-induced so this would be a
breach and damages would be available.
Law cases, reports and other references the examiners would expect you to
use
Hochster v De La Tour (1853) 2 E&B 678; White & Carter (Councils) Ltd v
McGregor [1962] AC 413; Paradine v Jane (1647) Al 26; Taylor v Caldwell (1863) 3
B&S 826; Krell v Henry [1903] 2 KB 740; Herne Bay v Hutton [1903] 2 KB 683;
Super Servant Two [1989] 1 Lloyd’s Rep 148; Chandler v Webster [1904] 1 KB 493;
Fibrosa v Fairbairn [1943] AC 32; National Carriers v Panalpina [1981] AC 675; Law
Reform (Frustrated Contracts) Act 1943; Hadley v Baxendale (1854) 9 Exch 341.
Common errors
Failing to consider the anticipatory breach issue and the events in the first part of
the facts. Failing to use the relevant case law in this area.

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 Examiners’ reports 2015

A good answer to this question would…

deal logically with all the relevant issues and use the relevant case law to support
arguments.
Poor answers to this question…
failed to address all the issues. It is important to consider all the facts that are given
as raising potential legal issues.
Question 4
Seema places an advert in her local shop window, ‘Five goblets for sale: each
£10. Available only to the first five people who pay me this amount by
Saturday 1st May’.
Ali sends Seema £10 in the post on Tuesday 27th April and says he will collect
one goblet on Monday 3rd May. The letter gets lost in the post.
In the morning of Thursday 29th April Chet telephones Seema and asks if he
can buy two goblets for £15. Seema says she needs time to think about this
and Chet tells her to let him know by Saturday at 10am. On Thursday evening
Seema calls Chet and leaves a message on his answering machine saying, ‘I
agree you can have two goblets for £15.’ Chet does not hear the message
until Saturday morning.
Being disappointed by the response to the advert, Seema decides to place the
remaining three goblets in an auction on Friday 30th April. Seema places a
note in her window stating that the goblets are no longer for sale and that
they are going to auction.
Chet attends the auction and is delighted to see the goblets for sale. He
makes a successful bid and buys the three for £15. He sees Eduord, Seema’s
partner, at the auction and says ‘What a bargain I’ve got! I’m glad that Seema
didn’t respond to my telephone call’. Eduord calls Seema immediately. She is
furious as she was keeping two goblets for Chet. In anger she takes two
goblets to a charity shop on Friday evening.
Having seen the advert Diego arrives at Seema’s house on Saturday morning
with £10 and is very annoyed to see the note as he planned to give a goblet to
his mother as a present. Ali arrives on Monday to collect his goblet.
Advise Seema.
General remarks
This is a question in relation to agreement. You should begin by establishing the
nature of the advertisement, with close reference to relevant authority. Specifically,
with the certainty issue being discussed and the comments by Parker CJ in Fisher v
Bell. Good answers would make reference to this being a unilateral offer with
reference to Lefkowitz v Great Minneapolis Stores. If this is a unilateral offer then a
revocation would need to follow the principles of Shuey v USA. This case should be
read carefully, as the method was not exactly the same.
Seema v Ali – if the advert is a unilateral offer then this can be acceptance. You
should explain the general rules in relation to acceptance and then the postal rules,
with close reference to authority. These rules apply even if the post is lost, although
it may be that Seema has required the communication to actually reach her by the
use of the words ‘pay me’. In which case there is no contract with Ali.
If the advert is an invitation to treat then this is an offer which was not
communicated, as postal rules only apply to acceptance and not offer.

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LA1040 Elements of the law of contract

Seema v Chet – if the advert is an offer then this communication is a counter offer,
which Seema needs to accept. The original offer is ended. Seema now needs to
communicate acceptance – which is not done until Chet actually receives the
acceptance. Discuss the general rules of communication; if this were a commercial
context could we argue that the communication is when Chet should have heard
the acceptance? This is unlikely in this context. Chet then buys the three goblets at
the auction, which was not contentious, and tells Eduord that he no longer wants
the two goblets from Seema. Eduord serves to raise the issue of communication of
revocation of offer: can it be by a third party and is Eduord able to communicate it?
Reference should be made to Powell v Lee, Dickinson v Dodds.
If the advert is an invitation to treat then this is just a straightforward offer and the
same applies to communication.
Seema v Diego – if the advert is an offer then Diego is trying to accept as
prescribed. He arrives, sees the note, this is actual communication of revocation so
there is no need to apply Shuey but credit would be given for explaining how it
would operate. Can Seema revoke when Diego has begun to perform and is willing
to perform? See Errington v Errington-Woods.
If the advert is an invitation to treat then he is making an offer which she can reject.
Law cases, reports and other references the examiners would expect you to
use
Partridge v Crittenden [1968] 1 WLR 1204; Carlill v Carbolic Smoke Ball Co [1893]
1 QB; Hyde v Wrench (1840) 3 Beav 334; Entores v Miles Far East Corp [1955] 2
QB 327; Thomas v BPE Solicitors [2010] EWHC 306; Brinkibon v Stahag Stahl
[1983] 2 AC 34; Adams v Lindsell (1818) 1 B & Ald 681; Korbetis v Transgrain
Shipping [2005] EWHC 1345 (QB); Henthorn v Fraser [1892] 2 Ch 27; Dickinson v
Dodds (1876) 2 Ch D 463; Routeledge v Grant (1828) 4 Bing 653; Errington v
Errington-Woods [1952] 1 KB 290.
Common errors
Failure to use authority in answers. This cannot gain credit as you are required to
refer to relevant cases. With this area you should always consider the alternative
issue: what would be the results if the postal rule did apply and if it didn’t apply?
A good answer to this question would…
take the issues logically and clearly set out which parties were being advised. A
good answer would deal with the facts clearly, such as noting that Seema’s words
in the advert required the money to be paid to her, suggesting that the postal rules
would not apply.
Poor answers to this question…
failed to address the facts as given and dealt with the issues without reference to
authority. Some candidates who knew the authority made no attempt to apply it to
the facts.
Student extract
[the student gave extensive details of Fisher v Bell and Carlill v Carbolic
Smoke Ball]
From the above cases the advertisement issued by Seema should be treated
as an invitation to treat.
Ali sends £10 to Seema by post and such letter got lost in the post. We can
apply for postal rule that acceptance is deemed to be accepted when the
letter is posted.

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 Examiners’ reports 2015

Comment on extract
The first problem is common in examinations. The candidate has given a very
detailed summary of two cases which are relevant to this area. Then there is a line
which concludes that the advert is an invitation to treat. There is no explanation of
why this advert was an invitation to treat, such as perhaps it not being precise, or
incapable of being fulfilled due to limited resources. It is essential that the law
provided in the cases is applied to the facts in the problem question. By this the
candidate can show understanding of the principle.
The next part of the answer states that Ali can use the postal rules for acceptance.
This is illogical. If the advert is an invitation to treat then there is nothing for Ali to
accept. You cannot accept an invitation to treat. This error shows poor planning and
a lack of understanding on the part of the candidate. Making a short plan of the
events and their logical consequences before you begin writing your answer would
avoid this.
Question 5
‘There are not two alternative measures of damage, at opposite poles, but
only one: namely the loss truly suffered by the promisee.’ (Lord Mustill,
Ruxley Electronics & Construction Ltd v Forsyth (1995))
Critically evaluate how damages are awarded in light of the above statement.
General remarks
An essay question based on contractual damages. Here the focus is on the various
measures of damages. There may be some description of how the courts have
established the different heads of damages, expectation, reliance and restitution but
a good answer should critically consider the inclusion of restitution and consumer
surplus in a discussion of the more general measures of expectation and reliance.
Law cases, reports and other references the examiners would expect you to
use
Robinson v Harman (1848) 1 Ex 850; Ruxley Electronics v Forsyth [1996] AC 344;
Hadley v Baxendale (1854) 9 Exch 341; Farley v Skinner [2001] UKHL 49; Jarvis v
Swan’s Tours [1973] QB 233; Anglia Television Ltd v Reed [1972] 1 QB 60; AG v
Blake [2001] 1 AC 268; Experience Hendrix LLC v PPX Enterprises Inc [2003] 1 All
ER 830.
Common errors
Using a pre-prepared answer to a damages question which failed to address the
specific requirements of this question. Candidates often ask for sample answers,
but you must not learn these as if they are the only answer. Another error was
including all the issues in relation to damages, such as remoteness and mitigation,
when the focus here was on the measure of damages.
A good answer to this question would…
focus on the question itself: what is the best measure of damages to give true
compensation? A good answer would deal with the inclusion of the ‘consumer
surplus’ as a loss which flows from a breach of contract, or may focus on restitution
alone. There is no ‘perfect’ answer but the best answers show the candidate’s
understanding by answering the specific question asked.
Poor answers to this question…
failed to address the question or recited all the candidate knew on the issue of
damages, whether it was relevant or not.

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LA1040 Elements of the law of contract

Question 6
Rose runs an organic food shop, FreeFrom, and leases her premises from
Holly for £2,000 per month. In December, she accidentally slips over and
badly breaks her ankle. She is advised by the doctor to stay away from work
for six months and needs to employ a temporary shop assistant to work in
the shop for six months. This will put her in financial difficulty and means that
she will struggle to pay the rent on her shop until she is back at work in July.
Rose telephones Holly saying: ‘I will not be able to pay the full rent for the
next six months, can I pay a reduced amount of £1,000 per month until I
return to work in July?’ Holly agrees to accept the reduced rent since Rose’s
shop also sells some of the vegetables Holly grows on her allotment and she
does not want the shop to close.
Rose contracts with Ivy to work in FreeFrom for a period of six months, whilst
her ankle recovers. Rose’s daughter, Grace, often helps out in the shop and
always gets paid by her mother. She spends two weeks working in the shop
helping Ivy to learn about the business. Rose is delighted and at the end of
the fortnight tells Grace she will give her £500. As a result of her reduced rent,
Rose is also able to spend £3,000 on refurbishment to the shop.
Holly accepts the reduced rent of £1,000 for three months and then asks Rose
to start paying the full amount of £2,000 again and to repay immediately the
£3,000 that she owes for the first three months. Rose tells Holly that she will
not accept her demands. She is so worried about her financial difficulties that
she tells Grace that she cannot pay her the £500 she promised.
Advise Rose.
General remarks
The issue here was the enforceability of the arrangements between Rose and Holly
and Rose and Grace. The second arrangement also raises the issue of intention to
create legal relations. The answer could begin with a short definition of
consideration, with reference to relevant authority.
Rose v Holly – you should discuss whether there is consideration for promise by
Holly to accept the reduced rent. Good answers would discuss whether the principle
of factual benefit of Williams v Roffey Bros applies to the facts here and the limits to
that doctrine (if there are any) identified in Re Selectmove. You should then explain
the principle of Foakes v Beer / Pinnel’s Case and the common law approach to
such promises. Here it could be argued that selling vegetables in the shop is an
extra benefit for Holly. This logically comes before moving to equity.
You should then discuss whether Holly can be estopped from denying the promise
to accept less, including whether there is reliance on the promise and whether it
would be inequitable to go back on promise (in light of her expenditure). This
requires close reference to relevant authority.
Rose v Grace – you should also discuss whether the promise to Grace is
enforceable or whether it is past consideration and unenforceable. If it is
unenforceable for lack of consideration, you should explore whether the doctrine of
implied assumpsit is applicable. With application to the principles in Pao On the first
two elements can be considered on the facts, such as previous payments. The third
element of the agreement being valid apart from the problems of consideration
could usefully lead to consideration of the intention to create legal relations. You
could note issues such as the impact the familial relationship has on any liability
and the significance of Grace’s previous payments for working in the shop.

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 Examiners’ reports 2015

Law cases, reports and other references the examiners would expect you to
use
Currie v Misa (1875) LR 10; Williams v Roffey Bros [1991] 1 QB 1; Foakes v Beer
(1884) 9 App Cas 605; Pinnel’s Case (1602) 5 Co Rep 117a; Re Selectmove [1995]
1 WLR 474; CLP v High Trees House [1947] KB 130; Re McArdle [1951] Ch 669;
Pao On v Lau Yiu Long [1980] AC 614; Jones v Padavatton [1969] 1 WLR 328.
Common errors
Failure to use relevant cases and think logically about the facts given. It is essential
that the facts presented in the problem scenario are applied to the principles from
the relevant authority.
A good answer to this question would…
begin with a logical explanation of the issue of consideration and then explain
clearly how the facts were applicable to the law. There would be consistent use of
relevant authority.
Poor answers to this question…
began with long introductions, some over a page, on the general principles of
consideration. This may show knowledge but does not show understanding of the
law which is the key requirement in answering a problem question. As with other
questions, some candidates failed to use cases to support their arguments.
Question 7
Agatha telephones Brian to order a ‘Betahouse’ food blender, the latest
device for perfect baking. Brian mishears this and thinks she wants a
‘Bekahaas’, the standard blender. Brian tells Agatha that he has one for £200
and Agatha is delighted at this price as this is much less than the normal cost
of a ‘Betahouse’ blender, which is £800. She tells Brian to put it aside for her
and she will be in at 5pm that day to collect it.
Later Agatha, who runs a shop selling antiques, receives a telephone call
from someone claiming to be Polly Petty, a famous antiques collector and
television celebrity and the host of a television programme about antiques.
‘Polly Petty’ asks if Agatha’s wonderful Russian Blue clock is for sale as she
would like to buy it to make an episode of her television show about it.
Agatha is very flattered and delighted as ‘Polly Petty’ is willing to pay top
price. In fact, ‘Polly Petty’ is a rogue called Hetty.
When ‘Polly Petty’ arrives Agatha is so star struck that she asks for publicity
shots to be taken, which Polly happily agrees to. Agatha loads the clock into
Polly’s car and then Polly produces her cheque book. Although Agatha is
reluctant to take a cheque for such a large amount she does not want to miss
the opportunity for such good publicity.
Agatha then arrives at Brian’s shop and discovers that a Bekahaas has been
set aside for her and she refuses to accept it. Then later, at the bank she
discovers that the cheque is a forgery. On the way home she sees her
Russian Blue clock in Zayn’s second hand shop. She goes in and demands
he return it to her.
Advise Agatha.
General remarks
The issue here is mistake. Briefly explain the consequence of mistake on a contract
– making it void and not voidable.
Agatha v Brian – mistake which was mutual at cross purposes. It could be argued
that Agatha snatched at a bargain as the price was considerably lower, with

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LA1040 Elements of the law of contract

reference to relevant case law. Generally, a discussion of the requirements of

mistake here is relevant.
Agatha v Zayn – there is clearly a fraud by Polly but as she has disappeared this is
of no use, so you should not focus on misrepresentation. This would only make the
contract voidable and on the facts the property had been sold to Zayn before
Agatha realised the deceit. Misrepresentation makes the contract voidable so Zayn
obtained good title if there was a contract. To have a claim against Zayn then she
must prove that he never obtained good title, as there was no contract between
Agatha and Polly. Then unilateral mistake to identity: was it a fundamental mistake
or just as to finances? This should include a discussion of distance or face to face
contract.
Law cases, reports and other references the examiners would expect you to
use
Smith v Hughes (1871) LR 6 QB 597; Raffles v Wichelhaus (1864) 2 H&C 906;
Shogun Finance v Hudson [2003] UKHL 62; Cundy v Lindsay (1878) 3 App Cas
459; Phillips v Brooks [1919] 2 KB 243; Ingram v Little [1961] 1 QB 31; Bell v Lever
Bros [1932] AC 161; Leaf v International Galleries [1950] 2 KB 86; Great Peace
Shipping v Tsavliris [2002] EWCA Civ 1407.
Common errors
Only dealing with misrepresentation, which, on a clear understanding of the
principles, would not have helped in a claim against Zayn. Also, there was no issue
of the Sale of Goods Act, as Brian did not make any guarantees as to the blender.
There was a misunderstanding.
A good answer to this question would…
understand the issues which were relevant and what Polly would need to do to
avoid the contractual obligation to buy the blender and recover the property from
Zayn.
Poor answers to this question…
failed to spot the issues in the question, only dealing with misrepresentation, which
shows a lack of understanding as to the consequences of both misrepresentation
and mistake.
Question 8
Simone has a dairy farm business and attends a meeting with Rita, the
manager at Freshco, a large national supermarket to whom Simone wishes to
sell her milk. Rita is impressed by Simone and wants to do business with her.
Rita agrees to contract with Simone for a period of six months. She hands
Simone the standard Frescho order form which details the quantity of milk
Simone is required to supply each week and the dates on which it is to be
delivered to the supermarket. Simone is thrilled to have this business
opportunity and signs the order form immediately. Unbeknown to her, on the
back of the order form, in very small print, it reads:
Clause 1.1 ‘Freshco reserves the right to cancel the order at any time.’
Cause 1.2 ‘Freshco limits its liability for any damage whatsoever and
howsoever caused in the performance of its contractual
obligations to £100.’
After two weeks, Simone receives a telephone call from Polly telling her that
Freshco wishes to cancel all future orders with immediate effect. Simone is
extremely upset and slams the phone down. Rita decides to drive over to
Simone’s farm to check that she is alright. As she arrives, however, her car

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 Examiners’ reports 2015

slips in the mud and crashes into Simone’s barn, causing £5,000 worth of
damage.
Advise Simone.
General remarks
This question deals with the incorporation of terms into a contract, whether the
terms are applicable to the circumstances that have arisen and the statutory
regulation of the terms. To begin, you could identify the issues facing Simone: the
cancellation of the contract and the damage to her barn.
You should first discuss whether terms have been incorporated into the contract.
Most relevant here is whether the document (order form) is one which could be
expected to have contained contractual terms. As the form has been signed it may
be difficult to deny incorporation but reference can be made to the onerous nature
of the terms and if this requires further steps to be taken by Rita, on behalf of
Freschco, to bring this to Simone’s notice. It could be useful to point out that as they
are both business people this will be difficult for Simone to argue.
If incorporation can be established you would need to discuss whether the terms
cover the breaches that arose – particularly relevant here is whether Rita was
acting ‘in the performance of contractual duties’ when she damaged the barn, as
clause 1.2 specifically refers to liability arising in those circumstances. This point
was rarely noted by candidates, who instead focused on the wide nature of the
terms, ‘whatsoever and howsoever’ as part of the construction argument. Statutory
control over terms must then be examined. Since Simone is not a consumer only
UCTA is relevant and candidates should be able to examine the applicability of
s.3(2)(b)(i) and associated case law as well as s.2(2) and s.11 (in the event that
circumstances of accident might be held to fall within exclusion clause). One key
issue was that UCTA only covers attempts to exclude or limit liability for a breach
and therefore does not directly cover clause 1.1.
Law cases, reports and other references the examiners would expect you to
use
Unfair Contract Terms Act 1977; L’Estrange v F Graucob Ltd [1934] 2 KB 394;
Thornton v Shoe Lane Parking [1971] 2 QB 163; Parker v SER (1877) 2 CPD 416;
Spurling v Bradshaw [1956] 1WLR 461; Chapleton v Barry UDC [1940] 1 KB 532;
Andrews v Singer Co [1934] 1 KB 17; Ailsa Craig v Malvern Fishing Co [1983] 1
WLR 964; Canada Steamship v R [1952] AC 192; R&B Customs v UDT [1988] 1
WLR 321; George Mitchell v Finney Lock Seeds [1983] 2 AC 803; Smith v Eric
Bush [1990] 1 AC 831.
Common errors
Failure to address the common law clearly and to move directly to the statutory
provision. In relation to the statutory provisions many candidates broadly applied
UCTA to clause 1.1 when this is not an exclusion clause. Also, some candidates
just considered s.11 UCTA on reasonableness rather than explaining how this
section could be used. It is not a standalone section and you can only apply this via
sections such as s.2 and s.3.
A good answer to this question would…
identify the issues facing Simone and clearly deal with the common law before
moving to the relevant statutory provisions, perhaps with a line saying why UTCCR
does not apply.
Poor answers to this question…
failed to deal with the issues logically or to deal with the common law. Although this
may seem irrelevant in practice, as the legislation covers so much, it has limitations.
For example, the limits of UCTA for clause 1.1 and how to use the common law in

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LA1040 Elements of the law of contract

this area. Again, many candidates failed to refer to the wide range of relevant cases
in this area.
Student extract
Simone would like to know his rights and obligations and whether the
exemption clauses can be included and if he can be exempted from liabilities.
Under s14(2) Sale of Goods Act 1979 (SOGA) the seller cannot exempt
liabilities should supply goods with satisfactory quality.
In s14(2C) exemptions are that the defect is drawn to the party’s attention
and the party is given the opportunity to examine the goods.
In s14(2A) ‘satisfactory quality considers description’
Comment on extract
The candidate began well by identifying one of the parties. However, the opening
lines show a misunderstanding in claiming that ‘he’ can be exempted from liability –
it is Frescho who have the liability.
The candidate then goes on to list the elements of the Sale of Goods Act, when this
is not relevant to the facts. There was no discussion of the actual events, cancelled
orders and the damage to Simone’s property. It is important to answer the question
that is asked and not the one that you had hoped would be asked.

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 Examiners’ reports 2016

Examiners’ reports 2016

LA1040 Contract law – Zone A

Introduction
This examination contained a balance of questions across the full syllabus.
However, some questions were much more popular than others. Question 1 on
unilateral contracts was the most popular followed by Question 5 on
misrepresentation. The slightly different form of Question 1 with each character
raising separate issues in parts (a) – (e) helped candidates structure their answers
but also exposed any areas where the candidate had a lack of knowledge. Both
questions required a detailed and specific knowledge of the areas which was not
always present. Moreover, it was clear that candidates had revised selectively and
so were unable to address, or in some cases even identify the topic raised by, some
questions. The new form of Question 3 which offered a choice within the question
again rewarded candidates who had at their fingertips a detailed knowledge of the
particular doctrines to which the statements related. Lack of coverage in student
revision might also be inferred from the very small number of answers to Question 6
on the doctrine of restraint of trade. It would also appear to be the case that the
topic of remedies for breach of contract which is raised by Question 8 had been
neglected in revision.

Comments on specific questions

Question 1
The Head of the School of Textiles at Lastchance University thinks students
do not take enough exercise. On Monday he announces over Campus Radio
that he will donate a signed copy of his latest book to any student who cycles
from the University to the nearby Museum of Basket Weaving before the
weekend. On Tuesday he regrets his rash offer and puts up posters in the
School retracting his offer. On Thursday he announces the offer is withdrawn
over Campus Radio. Advise the following students:
a) Devi, who cycled to the Museum on Monday afternoon but was not
aware of the offer until she arrived.
b) Ellis, who, having heard the offer on campus radio on Monday,
trained all day Tuesday and cycled to the Museum on Wednesday.
c) Fred, who was told by another student about the withdrawal of the
offer just as he was about to set out on Wednesday. He said ‘they
can’t do that’ and completed the ride.
d) Gina, who, having heard of the offer on Monday, was too drunk on
Tuesday and Wednesday to go to the campus but who set out on

1
 her bike on Thursday. She was half way to the Museum when she
heard the withdrawal over the radio.
e) As (d) but the prize offered was £5,000.
General remarks
The Head of School is making a unilateral offer. An answer should recognise this at
the outset, outline the general requirements of unilateral contracts before examining
each scenario individually.
Overall candidates answered (a) – (c) quite well but were less successful with the
(d) – (e).
Law cases, reports and other references the examiners would expect you to
use
(a) Devi: You cannot accept an offer of which you were unaware (R v Clarke).
Perhaps also discuss Williams v Cawardine (irrelevance of motive) and Gibbons v
Proctor (no conflict once it is recognised that transmission to superior officer was
the specified act).
(b) Ellis: Discuss Shuey with regard to the attempted revocation which is probably
ineffective.
(c) Fred: (Revocation by poster ineffective as with Ellis following Shuey.) However,
the actual communication of revocation by a third party (another student) is effective
according to Dickinson v Dodds (a bilateral contract case but still applicable).
(d) Gina: ‘There are restrictions upon when a unilateral offeror may revoke his offer
once the offeree has begun performance of the stipulated act.’ It was necessary to
imply such a term in Errington v Errington.
(e) There would be no breach of contract by the Head because the term just
described will not be implied where a large amount of money is offered for a
relatively small job – in Luxor v Cooper more than the Lord Chancellor’s annual
salary for a few hour’s work, in this scenario £5,000 for a short bike ride.
Common errors
Some scripts incorporated long and irrelevant discussions about the general
principles of offer and acceptance in relation to bilateral contracts.
A good answer to this question would…
focus immediately upon unilateral contracts and include a relevant discussion of
each factual scenario supported by authority. Good scripts discussed Gina’s
position well and exceptional ones recognised the issue raised in (e).
Poor answers to this question…
gave an unequal discussion to the different scenarios. Often they contained no
relevant discussion of (e) and often also failed to identify (d) as raising a revocation
issue.
Student extract
Q1(c)
The issue here is regarding communication via a third party. Fred, a potential
offeree, was warned about the withdrawal just before he started performing
(i.e. cycling). In the light of Dickinson v Dodds (1876) this would constitute a
perfectly valid revocation. Although this happened with Fred on Wednesday
and the ‘proper’ revocation was not made until Thursday, there seems no
reason why Fred should insist on the offer still having been open on
Wednesday when the revocation was timely brought to his notice. So long as
it has not already been accepted, an offer can be revoked validly by the

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 Examiners’ reports 2016

offeror at any time they want unless consideration has been provided to keep
the offer open for a certain time period (Routledge v Grant)(1828). Here,
however, nothing of the sort was done, so Fred does not in any way seem
entitled to receive a signed copy of the book
Comments on extract
This candidate gave a concise and well supported answer without any words that
would not gain credit. The most relevant authority Dickinson v Dodds and the
principle for which it stands i.e. that revocation can be communicated by a third
party are dealt with in the first three sentences. The candidate had already dealt
with the Shuey point in Q1(c). There then followed a slightly speculative sentence
showing off a wider knowledge that the offer could not have been revoked if good
consideration had been received in exchange for a promise to keep it open. These
were not the exact facts of this scenario but following a concise and complete
answer to the exact point raised, even if they did not get actual credit, inspired
confidence in the examiner that the candidate knows her/his law very well.
This part of the question would merit a 1st class mark. This standard was almost,
but not quite, sustained through the other parts of the question and a very high
upper second class mark was achieved for the question overall.
Question 2
Ahmed says to Jane, ‘Would you like to buy my computer for £300?’ Jane
agrees to buy it. Advise Ahmed in each of the following alternative
circumstances:
a) Jane intends to buy the laptop computer that Ahmed was using
when he made the offer. Ahmed intended to sell an old desktop
computer that he has at home and no longer uses.
b) Ahmed only owns one computer. English is not his first language
and he often confuses the words three and nine when speaking.
Jane realises that Ahmed has probably made a mistake in that he
meant to sell his computer for £900.
c) Ahmed thinks that his mother has bought him a new computer as a
birthday present. In fact she has bought him a new television.
d) Unknown to Ahmed his only computer was destroyed in a gas
explosion at his home which took place an hour before his
conversation with Jane.
e) Both Ahmed and Jane think that Ahmed’s only computer has the
latest Pentium 10 processor. In fact it has a much less powerful
Pentium 6 processor.
General remarks
This question involves issues of mistake. This is a particularly difficult area of law to
understand. The key to success here after identifying the general issues raised in
the different scenarios as involving mistake is being able to categorise the different
types of mistake involved. This task is made easier by the way the question is
structured with five different factual scenarios. (a) Involves a ‘cross purposes’
mistake where the issue is to ascertain whether any agreement was reached; (b)
involves a unilateral mistake, i.e. a mistake of one party which is known to the other;
(c) involves a common or shared mistake where both parties make the same
mistake, here as to the subject matter of the contract as does (d) with the difference
that in (c) the goods never existed while in (d) they once existed but subsequently

3
perished; and in (e) there is another common mistake but this time as to some
quality that the contractual subject matter is assumed by both parties to possess.
Those who correctly analysed the facts as raising issues of mistake generally
scored good marks, with their best part often being (e) which raised the issue of a
common mistake as to quality. Answers to parts (c) and (d) were often very similar.
Law cases, reports and other references the examiners would expect you to
use
Relevant cases include:
(a) Cases supporting the general objective approach to agreement include: Smith v
Hughes and Centrovincial Estates. If, even after consideration of the reasonable
man test, no agreement can be seen then no contract comes into existence as in
Raffles v Wichelhaus.
(b) One party’s awareness that the other has made a mistake which is the definition
of a unilateral mistake will not affect the validity of a contract unless the offeree
either knew, or should have known that the offeror was mistaken as to the terms of
the contract. See respectively Hartog v Collins and Shields and Scriven Bros v
Hindley.
(c) Courturier v Hastie and McCrae v CDC need to be discussed here and
particularly the question whether when there is a common mistake as to the
existence of the contractual subject matter the contract is always void or whether
this conclusion depends upon a proper construction of the contract as explained in
McCrae.
(d) This situation is dealt with by statute so reference should be made to Sale of
Goods Act 1979 s.6.
(e) The leading case on common mistakes as to quality is Bell v Lever Bros but
reference should also be made to the Great Peace.
Common errors
A substantial minority of students missed the point entirely and wrote about offer
and acceptance rather than mistake. Those who realised the question was about
mistake generally scored well but often repeated the same answer for (c) and (d).
Indeed in (c) many were side-tracked to talk about a contract with his mother, or
assumed he could still sell his ‘old’ computer even though he didn’t get a ‘new’ one.
A good answer to this question would…
display knowledge of the different categories and sub-categories of mistake.
(Classification is very important in mistake.) After identification, the discussion must
be supported by relevant authorities and engage with some of the more difficult
questions these cases throw up such as in (c) whether a common mistake as to
existence of the subject matter of a contract renders the contract void at common
law as Courturier was first thought to suggest or whether the High Court of Australia
was correct in McCrae in suggesting that this all depends upon a proper
construction of the contract. Strong answers to (d) will also appreciate that the Sale
of Goods Act s.6 is based upon the broader interpretation of Courturier above but,
according to its own terms, is only applicable to goods which once existed but
subsequently perished and not to goods that never existed.
Poor answers to this question…
failed to realise that all the factual variants raised different issues about mistake.
They also failed to identify the different categories of mistake and displayed little
knowledge of the distinct principles of law applicable to each.

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 Examiners’ reports 2016

Question 3
Critically evaluate TWO of the following statements:
a) The supposed distinction between a mistake as to ‘identity’ and a
mistake as to ‘attributes’ is impossible to apply.
b) Only physical threats will constitute duress sufficient to vitiate a
contract; threats of mere economic harm will not.
c) The distinction between an invitation to treat and a contractual offer
is an elusive one.
d) The so called ‘parole evidence rule’ should be abolished.
General remarks
The substantive content of each is obvious. However, the question does call
expressly for a critical evaluation. The statements have been composed so that
there is considerable scope for the latter. Part (c) was answered best and parts (b)
and (d) were the least popular.
Law cases, reports and other references the examiners would expect you to use
Relevant cases include:
(a) Kings Norton Metal Company v Edridge; Cundy v Lindsey and, to a lesser
extent, Phillips v Brooks; Ingram v Little and Lewis v Avery.
(b) Atlantic Baron; Atlas v Kafco; Pao On v Lau Yiu Long.
(c) Partridge v Crittenden; Fisher v Bell; Gibson v Manchester City Corp and
Boots v Pharmaceutical Society of GB.
(d) AXA Sun Life Services v Campbell Martin; City and Westminster Properties
v Mudd.
Common errors
A significant number of students did not read and act on the instruction to discuss
two statements and chose instead to discuss a single statement (and so be marked
out of 50 per cent for this question) or to write about all four statements (when only
the best two marks were recorded). There were also a number of answers that did
not appreciate that the distinction in (a) was used in many cases of mistaken
identity through impersonation which raise issues of unilateral mistake, discussing
instead common mistakes as to quality in contracts for the sake of goods.
A good answer to this question would…
achieve a balance between describing the area of law involved and critically
evaluating the statement made about it as expressly required by the question.
Poor answers to this question…
often favoured description over critical analysis.
Student extract
Q3(c) – para 1 only
It was set out on the case of Brinkibon that an offer is accepted when it is
communicated from the offeree to the offeror. An invitation to treat places an
offer to the world or a specific segment and order bids to be made (Blackpool
and Fylde). A pharmacy, as in the case of Pharmaceutical Society v Boots
sets its scenario, contains many products and invited the customer to choose
what he prefers but when he arrives at the till, meaning when he has
committed on his choices, this turns into an offer and he accepts that offer by
paying for it. A customer can however withdraw form this offer. That wouldn’t

5
 be the case if, as we have seen in Thornton v Shoe Lane Parking, the
customer accepts the ticket which allows him entry into the parking lot.
Vending machines are considered offers.
Comments on extract
This extract illustrates an answer from a candidate who has a good level of relevant
knowledge but does not present it in a very clear way. The first sentence is correct
but needs to be read twice to convince the examiner that there is not a basic
confusion between offer and acceptance. The analysis of the Boots case seems to
capture the point that in a self-service store an offer is made at the checkout till.
However the precise identification of the offer is unclear and it is not emphasised
that as a result of this analysis the presentation of goods on open shelves is an
invitation to treat. The contrast to the case of Thornton is better made.
The rest of the answer continues in a similar way and so the candidate achieves a
good pass overall when a higher mark would have been achieved with a clearer
presentation of the same knowledge.
Question 4
‘In the past the courts have used various devices to indirectly control the use
of exemption clauses. These techniques are now less important because of
the direct statutory regulation of this type of contractual clause.’
Critically evaluate this statement.
General remarks
This title invites a discussion of ‘indirect control’ by principles of incorporation and
construction, the latter including the doctrine of fundamental breach which were
used more extensively in the past. It was not a very popular question but those who
attempted it tended to do well.
Law cases, reports and other references the examiners would expect you to use
Incorporation – Chappleton v Barry UDC, Olley v Marlborough Court, Interfoto v
Stiletto, Thompson v London, Midland and Scottish Railway.
Construction – contra proferentem rule, Ailsa Craig Fishing v Malvern, Photo
Productions v Securicor and HIH Casualty v Chase Manhattan.
Statutory Regulation – Unfair Contract Terms Act 1977 (UCTA) ss.2,3, 11 and
Sch.1. Consumer Rights Act 2015 s.2 (defining trader and consumer), s.62
(defining an unfair term), s.64 (exceptions), s.65 (exclusion of liability for death and
personal injury), Sch.2 Part 1 (containing the expanded grey list of presumptively
unenforceable terms) and possibly OFT v Abbey National, Kasler v OTP and Aziz v
Caixa.
Common errors
Some candidates treated the question as if it had asked them to write all they knew
about exemption clauses with no attempt to adapt that knowledge to the evaluation
over time of indirect and direct control techniques.
A good answer to this question would…
discuss UCTA as a method of direct control and better students will be aware that
UCTA is now applicable only to business-to-business contracts and that exemption
clauses in business-to-consumer contracts are regulated by the modified version of
the Unfair Terms in Consumer Contracts Regulations 1999 provisions that have
been incorporated into the Consumer Rights Act 2015.

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 Examiners’ reports 2016

Poor answers to this question…

involving exemption clauses tend to be over general, fail to engage with the detail of
specific provisions and demonstrate no knowledge of recent changes to the law.
Question 5
Lord Grantam is short of money. He decides he will have to sell the cherished
motorcycle his uncle gave him. His uncle told him it was the motorcycle that
won the last Le Mans race before the Second World War began and was in
‘perfect original condition’.
Lord Grantam takes the motorcycle to ‘Vintage Motorcycle Sales’. While a
garage employee, Mike, is inspecting a motorcycle, Lord Grantam says:
‘Don't worry old boy. I can assure you that it is a perfect pre-war motorcycle
and has never had a crash. I know you need to be sure so keep it for a week
to check it out.’
As he left Lord Grantam gave Mike a thick file of documents about the bike.
The following evening Lord Grantam invites his uncle to dinner to tell him that
he is going to have to sell the motorcycle. Lord Grantam is concerned that his
uncle may be upset but his uncle tells him not to worry as he had made up
the story about it being a famous race winner. In fact it is made up from parts
obtained from motorcycles that crashed after the war.
Next week Vintage Motorcycle Sales’ expert valuer is off sick and nobody
looks at the documentation. An inspection by an expert would have
immediately revealed that it was made of post-war parts and the documents
would have confirmed that it was not the famous race winner.
When Lord Grantam returns to Vintage Motorcycle Sales he is offered and
accepts £50,000 for the motorcycle which is in fact worth only £500. The true
value of the motorcycle is only discovered several months later. If the
motorcycle had been the famous race winner Lord Grantam originally
believed it to be it would have been worth £100,000.
Advise Vintage Motorcycle Sales.
General remarks
The question is about misrepresentation. This is made clear by the instruction at the
end of the question which directs the candidate to discuss whether any statements
made were ‘mere representations’ (i.e. they were not terms of the contract) and if so
what remedies for misrepresentation may be available. Discussion of other issues
that are not relevant to these questions will fail to gain credit.
The factors that determine whether a statement is regarded as a term or a mere
representation must be considered and applied (see below) before outlining the
general requirements of an action for misrepresentation (see further below).
This was a popular question and many answers included a sound, if sometimes
over general, account of the law of misrepresentation.
Law cases, reports and other references the examiners would expect you to
use
With regard to the issue whether the statements were terms or mere
representations the factors to be applied are:
(1) Any time lag between the making of the statement and the eventual
conclusion of the contract, e.g. Routledge v McKay.

7
 (2) Whether the representor or representee had greater skill and knowledge in
relation to the thing said, e.g. Oscar Chess v Williams; Dick Bentley v
Harold Smith Motors; Esso v Mardon.
(3) The importance of the thing said, e.g. Bannerman v White.
(4) Whether the statement was accompanied by a recommendation that it be
verified, e.g. Ecay v Godefroy.
The general requirements of a misrepresentation should be outlined, i.e. a
statement of fact that induces the contract.
The failure to inspect the documents does not, on the authority of Redgrave v Hurd,
deprive the representee of the remedy of rescission.
The availability of rescission should be discussed and in particular any possible
‘bars’ that might have arisen. The discovery of the statements’ untruth several
months later should prompt a discussion of affirmation and lapse of time. Good
answers will be aware that lapse of time is not applicable to fraudulent
misrepresentation. These statements were not fraudulent when first made but might
be regarded as so by application of the principle of a continuing representation
(With v O’Flanagan, Spice Girls v Aprilia) combined with Lord Grantam’s later
knowledge acquired when he had dinner with his uncle.
If the garage chooses or is unable to rescind the contract, the different routes to
damages should be discussed: the Misrepresentation Act s.2(2) damages in lieu of
rescission including the open question whether such damages remain available
after the right to rescind is barred; damages for fraudulent misrepresentation (Derry
v Peek) and damages under the Misrepresentation Act s.2(1). Stronger answers will
compare the advantages of these different claims with respect to what must be
proved and by whom, as well as the associated measure of damages and the
application of any limiting factor such as contributory negligence. The reversed
burden of proof Howard Marine dredging v Ogden and the fraudulent measure of
damages Royscott v Rogerson make the action under s.2(1) most attractive.
Common errors
Some candidates discussed the potential liability of Lord Grantam’s uncle to Lord
Grantam which is not relevant as the instruction was to ‘Advise Vintage Motorcycle
Sales’.
A good answer to this question would…
give a well-structured account of first the principles that determine whether a
statement made in negotiations became a term of any resulting contract and then
the law of misrepresentation. Better answers also included a discussion of
Redgrave v Hurd as well as With v O’Flanagan and Spice Girls v Aprillia.
Poor answers to this question…
often ‘launched’ into an over general account of misrepresentation without
discussing the prior question as to whether the statements made were terms or
mere representations. Weaker answers often failed to include a proper discussion
of the remedies available for misrepresentation.
Question 6
‘The doctrine of restraint of trade performs a valuable role in relation to
contracts of employment but less so in relation to contracts for the sale of a
business.’
Critically evaluate this statement.

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 Examiners’ reports 2016

General remarks
This question calls for a knowledge of the doctrine of restraint of trade and how it
operates in these two key areas. The question was attempted by very few students
suggesting that the topic is not often revised (or maybe often not taught) despite the
fact that it remains on the syllabus.
Law cases, reports and other references the examiners would expect you to
use
Contracts of employment – Herbert Morris Limited v Saxelby; Mason v Provident
Clothing & Supply Company Ltd; Wyatt v Kreglinger and Fernau Proactive Sports
Management Ltd v Rooney.
Sale of a business – Nordenfelt v Maxim Nordenfelt.
Common errors
So few candidates answered the question that these cannot be identified.
A good answer to this question would…
describe the two areas of application in the title but also would address the question
whether the doctrine of restraint of trade performs a more valuable function in
relation to employment contracts than where the sale of a business is involved.
Poor answers to this question…
fail to include relevant case law and do not engage with the precise question asked.
Question 7
The Strolling Bones are an ageing rock band who now enjoy the better things
in life. They contract with Excess University Student Law Society to appear at
their annual dinner for a fee of £200,000 and 20 cases of Chateau Latour wine.
It is agreed that the fee shall be payable and the wine deliverable in two
stages: half on signing and half on the day of the performance. The Student
Law Society make the first payment but do not deliver any wine to the band.
The Strolling Bones pay a non-refundable deposit of £5,000 when they book
two large lorries to transport their equipment. The Student Law Society spend
a large sum of money on publicity. The venue at which the annual dinner is to
take place fails its safety inspection the day before the performance and the
dinner is cancelled.
Advise the Strolling Bones as to their rights and liabilities.
General remarks
The question is about the effect upon a contract of an event that took place after
the contract was signed. The timing of the event after, and not before the signing of
the contract means that there is no issue of mistake. Further, as this event (the
failed safety inspection) is not caused by the fault of either party, the issue to be
discussed is frustration rather than breach. Students should introduce the doctrine
in general terms and quickly discuss its application to the specific facts of this case.
Awareness of the Gamerco case should have caused students to ‘think frustration’.
However, a significant number of answers missed the frustration issue completely
instead writing broad descriptive answers about consideration, the part payment of
debts (presumably based upon the failure to deliver the wine) and some about
anticipatory breach. Those who wrote about frustration generally scored well.
Law cases, reports and other references the examiners would expect you to
use
The contract is frustrated because the performance of the contract has become
illegal. The Spolka case can be mentioned but the most relevant is the Gamerco
case.

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Under the Law Reform (Frustrated Contracts) Act 1943 s.1(2), it would appear that
the £100,000 paid is recoverable and that the other £100,000 payable ceases to be
payable. There is, however, a proviso to s.1(2) which gives the court a broad
discretion to allow some of the £100,000 to be retained to offset expenses incurred
such as the non-refundable deposit. The wine raises an issue a better answer
should spot (see below).
The final remedial issue is whether there is any ‘valuable benefit’ to the band from
the publicity for which they may have to pay for under s.1(3) as in BP v Hunt.
Common errors
The major error was failing to identify the question as raising frustration. However,
some of those who had a basic knowledge of when frustration occurred did not
have an equal understanding of the rights and remedies of the parties both at
common law and under the 1943 Act.
A good answer to this question would…
display a sound knowledge of the different categories of frustration and that these
facts belonged to the category where performance of the contract has become
illegal. Strong answers displayed a good knowledge of the key subsections of the
1943 Act.
The wine raises an issue a better answer should spot. Section 1(2) will not apply to
the obligation to supply the wine because the section only applied to payments of
money. Therefore, the common law applies and so, while the obligation to supply
the second instalment of wine is discharged, the obligation to supply the first
instalment has already accrued and so is enforceable. Chandler v Webster is the
most obvious authority that strong answers may refer to here.
BP v Hunt is a very difficult case and better answers distinguished themselves with
a good discussion of this case in relation to s.1 (2).
Poor answers to this question…
lacked detail throughout but especially with regard to the operation of the different
provisions of the Law Reform (Frustrated Contracts) Act 1943.
Question 8
In January 2015, Professor Dim signed a contract with Cambridge Academic
Press (CAP) to write a book on contract law in their prestigious Masterclass
series. Dim was to be paid £20,000 and CAP had an option to employ Dim to
write a companion book on property law for a £25,000 fee. Over the next year
Dim spent £5,000 on books and travel to libraries while working on his new
book. In January 2016 in breach of contract CAP terminate the contract with
Dim because CAP had recently contracted with Professor Genius to write a
contract law book in the Masterclass series. CAP invited Dim to publish his
contract book for a fee of £100 in a new series aimed at school students. The
Head of the School of Law had promised Dim that he would receive a special
payment of £10,000 if his book was published in the Masterclass series. Dim
writes to CAP telling them he feels humiliated by the way he has been treated
and pointing to a clause in their contract which he had inserted before the
parties signed and which CAP overlooked:
If the contract is terminated by the publishers in breach of contract, they shall
pay to the author a penalty of £10,000.
Advise Dim as to what remedies he is entitled to in respect of CAP’s breach of
contract.

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 Examiners’ reports 2016

General remarks
This question was about remedies for breach of contract. The instruction at the end
of the question made this clear, candidates were expressly directed to advise Dim
as to the remedies he is entitled to as a result of CAP’s breach of contract.
Consequently, no credit can be gained for discussing any other contract doctrines.
Many candidates seemed to miss this important and obvious pointer and so the
question was very poorly answered in the main. This might reflect a tendency to
attach less importance to remedies for breach of contract in teaching and revision,
perhaps because it is often placed at the end of a course.
Law cases, reports and other references the examiners would expect you to
use
Is Dim entitled to specific performance (SP)? SP is not usually available for breach
of a contract of personal service: Giles v Morris and the principle of mutuality would
prevent the specific enforcement of a contract when specific performance would not
be ordered against the party now seeking it: Page One Records v Britton.
Can Dim seek liquidated damages under the contract clause? The contractual
description as a penalty is irrelevant Dunlop v New Garage. The main authority is
now Cavendish Square Holdings BV v Makdessi and Parking Eye Ltd v Beavis
[2015] UKSC 67 and full credit should be given to students who refer to the decision
in the Supreme Court. Students might note that he SC chose to restate, but not to
abolish, the penalty rule. Further, the previous rule that in a contract between
‘properly advised parties of comparable bargaining power’ (Phillips HK v A-G HK)
there should operate a ‘strong initial presumption’ of enforceability was endorsed.
If Dim seeks unliquidated damages, he could claim his £5,000 losses Anglia TV v
Reed; McRae v CDC. Alternatively, (he could not claim both C & P Haulage v
Middleton) he could seek expectation losses which could include: the £25,000 fee,
possibly something in respect of the lost chance of publishing the companion book
(Chaplin v Hicks; Giedo van der Garde v Force India Formula 1) and also the lost
£10,000 bonus. If this ‘promised’ bonus was a matter of entitlement if the book were
published, its recovery from CAP would depend upon the application of the
remoteness rules: Hadley; Victoria Laundries; Heron 11 and the Achilleas.
Dim might also seek damages for non-pecuniary loss but these are more commonly
awarded in consumer contracts, Jackson, Jarvis, etc. though the test applied in
Farley v Skinner is now more generous to recovery. Unliquidated damages would
be subject to reduction if Dim had not acted reasonably to mitigate his own losses.
This might extend to accepting the offer to publish in the less prestigious series:
Payzu v Saunders.
Common errors
Many students simply failed to discuss remedies and instead wrote about exclusion
clauses.
A good answer to this question would…
discuss the availability of specific performance, liquidated damages and
unliquidated damages. There was an opportunity for students to display a
knowledge of the recent decision of the Supreme Court in Cavendish Square
Holdings BV v Makdessi and Parking Eye Ltd v Beavis [2015] UKSC 67 which is the
first time the UK’s highest appellate court has addressed the availability of
liquidated damages for almost a century. Full credit was given to any students who
were aware of the decision. Strong answers also distinguished themselves by their
discussion of unliquidated damages and their understanding and application of the
principles of remoteness of loss.

11
Poor answers to this question…
included irrelevant material despite the clear instruction directing them to the
relevant areas of law. There was no exclusion clause in the factual scenario but this
did not stop some candidates from writing at some length about the different
mechanisms for the control of exemption clauses.

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 Examiners’ reports 2016

Examiners’ reports 2016

LA1040 Contract law – Zone B

Introduction
This examination contained a balance of questions across the full syllabus.
Notwithstanding this, it was clear that candidates had revised selectively and so
some topics were much more popular than others. Question 1 on agreement and
consideration was the most popular (with Question 5 on misrepresentation the
second most popular). However, it seemed that candidates were not perhaps
prepared for a question that raised issues of agreement and consideration.
Questions such as Question 3, which gives candidates a choice, give an advantage
to students who have revised broadly so that they can select the two statements
that make best use of their knowledge. There were some areas, perhaps perceived
to be difficult ones, which candidates did not revise as thoroughly as agreement,
consideration and misrepresentation. Candidates who ‘dropped’ mistake (Question
2) and remedies for breach of contract (Question 8) found their choice of questions
to be severely curtailed.

Comments on specific questions

Question 1
Lord Aristo is an art collector. His favourite painting, Bacon’s ‘Pope Pious’, is
stolen. Lord Aristo places an advertisement in the Times newspaper offering
a reward of £100,000 to anyone who is able to locate the painting. Advise Lord
Aristo in each of the following alternative circumstances:
a) Canon, a private investigator, is employed by Lord Aristo’s
insurance company to recover the picture. Canon locates the
picture and claims the reward.
b) Devi sees the advertisement, locates the picture and claims the
reward. Devi does not see an advertisement placed in the
Independent newspaper withdrawing the offer of a reward before he
finds the picture.
c) Vera, a police detective working on the theft, locates the picture and
claims the reward.
d) Baron Bluster, a friend of Lord Aristo, begins an extensive search for
the painting. He telephones Lord Aristo to tell him that he will be
meeting an informer that evening who will tell him where the
painting is. Lord Aristo tells Baron Bluster not to bother because he
has changed his mind about the reward. Baron Bluster goes ahead
with the meeting, gets the information and claims the reward.

1
General remarks
This question combines elements of agreement and consideration. Students should
identify that Lord Aristo’s advertisement is the offer of a unilateral contract. The
elements of a unilateral contract should be discussed at the outset and then the four
different alternatives discussed as below. The question provides its own structure
with the introductory discussion of unilateral contracts followed by separate sections
dealing with Cannon, Devi, Vera and Baron Bluster. The relevant issues are:
(a) Does Canon supply good consideration when the act he performs is the
performance of a pre-existing contractual duty owed to a third party (his employer,
the insurance company)?
(b) The issue here is what are the requirements for the revocation of a unilateral
offer?
(c) The issue here is whether Vera has provided good consideration when she
performs a pre-existing duty fixed by law generally.
(d) Has Bluster commenced performance of the act stipulated? If so, is revocation
possible?
Most candidates answered this question and did so reasonably well.
Law cases, reports and other references the examiners would expect you to
use
(a) Students should refer to cases such as the Eurymedon and Pao On v Lau Yiu
Long. Very good answers may notice that the consideration supplied by Canon is
the act of performing, rather than the promise to perform, a contractual duty owed to
a third party (his employer, the insurance company).
(b) Students should discuss the principle endorsed in Shuey that actual
communication is when the same notoriety is given to the revocation as was given
to the offer.
(c) Cases such as Collins v Godfroy, Glasbrook v Glamorgan Bros, Reading
Festival v West Yorks Police can be discussed.
(d) Here the cases which might be discussed include: Errington v Errington, Luxor v
Cooper.
Common errors
A good answer to this question would have a good introduction that demonstrated a
knowledge of the general requirements of unilateral contracts and then followed this
with a discussion of (a) – (d) that showed a good understanding of some of the
subtler distinctions and doctrines. Examples of this higher level knowledge and
application include: in (a) very good answers would recognise the two distinct
principles that the Eurymedon and Pao On stand for: respectively, that the act of
performing and the promise to perform, a pre-existing contractual duty owed to a
third party can constitute good consideration and in (d) an understanding that the
principle that a unilateral offeror is prevented from revoking the offer once the
offeree has begun performance of the stipulated act depends upon the implication
of a term to that effect as explained by the House of Lords in Luxor.
A good answer to this question would…
begin with a short introduction to unilateral contracts and then be able to ‘spot’ the
one significant issue raised in each part of the question and support a discussion
focused on that scenario with 2–3 appropriate authorities.
Poor answers to this question…
failed to note at the outset that this was a unilateral contract where acceptance was
by the performance of the stipulated act. Section (a) was not answered well with

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 Examiners’ reports 2016

many answers simply failing to see the consideration point. Surprisingly, many
weaker answers also failed to spot the issue of revocation in (d).
Student extract
This question concerns the area of offer and acceptance under the law of
contract.
The modern thinking in assessing whether an agreement has been reached
is done objectively and not subjectively. The outward visible signs are looked
at while the mental element is disregarded (Centrovincial Estates v
Merchant). The objective element may be qualified by a subjective element
(Hartog v Collin and Shields). This was the orthodox approach by the House
of Lords in Gibson v Manchester City Council.
Thus an offer must first be established with acceptance on identical terms,
unconditionally. An offer is defined as a firm undertaking to be bound in the
event its terms and conditions are accepted by the other party. It must be
final, certain and unambiguous. Unlike in the case of Gibson where the words
‘may be prepared to sell’ lacked the finality needed to be construed as an
offer. In Storer v Manchester City Council however, all details were certain
including price, thus it amounted to an offer.
Also not considered an offer are invitations to treat in the form of a display of
goods (Fisher v Bell), advertisements (Partridge v Crittenden), a supply of
information (Harvey v Facey) or a statement of intention (Harris v Nickerson).
Comments on extract
The extract above is the first third of an answer to this question. It is included to
illustrate the importance of only discussing areas of law and cases that are relevant
to the question being answered. The extract above is accurate, contains numerous
authorities but is largely irrelevant and so gains little credit. It is an account of the
concept of a legal offer and is illustrated with examples drawn from bilateral
contracts throughout, when this question involved a unilateral contract. Further, it
provides detail in respect to the question whether a contractual offer is ascertained
subjectively or objectively which is not in issue in this case. As a result, this long
discussion gains no credit. Credit is only given for accurate and relevant knowledge;
there are no charity marks. Fortunately, the rest of the answer was more focused
and discussed relevant principles resulting in a 2:2 mark overall for that answer.
Question 2
Ahmed says to Jane, ‘Would you like to buy my computer for £300?’ Jane
agrees to buy it. Advise Ahmed in each of the following alternative
circumstances:
a) Jane intends to buy the laptop computer that Ahmed was using
when he made the offer. Ahmed intended to sell an old desktop
computer that he has at home and no longer uses.
b) Ahmed only owns one computer. English is not his first language
and he often confuses the words three and nine when speaking.
Jane realises that Ahmed has probably made a mistake in that he
meant to sell his computer for £900.
c) Ahmed thinks that his mother has bought him a new computer as a
birthday present. In fact she has bought him a new television.
d) Unknown to Ahmed his only computer was destroyed in a gas
explosion at his home which took place an hour before his
conversation with Jane.

3
 e) Both Ahmed and Jane think that Ahmed’s only computer has the
latest Pentium 10 processor. In fact it has a much less powerful
Pentium 6 processor.
General remarks
This question involves issues of mistake. This is a particularly difficult area of law to
understand. The key to success here after identifying the general issues raised in
the different scenarios as involving mistake is being able to categorise the different
types of mistake involved. This task is made easier by the way the question is
structured with five different factual scenarios. (a) Involves a ‘cross purposes’
mistake where the issue is to ascertain whether any agreement was reached; (b)
involves a unilateral mistake, i.e. a mistake of one party which is known to the other;
(c) involves a common or shared mistake where both parties make the same
mistake, here as to the subject matter of the contract as does (d) with the difference
that in (c) the goods never existed while in (d) they once existed but subsequently
perished; and in (e) there is another common mistake but this time as to some
quality that the contractual subject matter is assumed by both parties to possess.
Those who correctly analysed the facts as raising issues of mistake generally
scored good marks, with their best often being (e) which raised the issue of a
common mistake as to quality. Answers to parts (c) and (d) were often very similar.
Law cases, reports and other references the examiners would expect you to
use
Relevant cases include:
(a) Cases supporting the general objective approach to agreement include: Smith v
Hughes and Centrovincial Estates. If, even after consideration of the reasonable
man test, no agreement can be seen then no contract comes into existence as in
Raffles v Wichelhaus.
(b) One party’s awareness that the other has made a mistake which is the definition
of a unilateral mistake will not affect the validity of a contract unless the offeree
either knew, or should have known that the offeror was mistaken as to the terms of
the contract. See respectively Hartog v Collins and Shields and Scriven Bros v
Hindley.
(c) Courturier v Hastie and McCrae v CDC need to be discussed here and
particularly the question whether, when there is a common mistake as to the
existence of the contractual subject matter, the contract is always void or whether
this conclusion depends upon a proper construction of the contract as explained in
McCrae.
(d) This situation is dealt with by statute so reference should be made to the Sale of
Goods Act 1979 s.6.
(e) The leading case on common mistakes as to quality is Bell v Lever Bros but
reference should also be made to the Great Peace.
Common errors
A substantial minority of students missed the point entirely and wrote about offer
and acceptance rather than mistake. Those who realised the question was about
mistake generally scored well but often repeated the same answer for (c) and (d).
Indeed in (c) many were side-tracked to talk about a contract with his mother, or
assumed he could still sell his ‘old’ computer even though he didn’t get a ‘new’ one.
A good answer to this question would…
display knowledge of the different categories and sub categories of mistake.
(Classification is very important in mistake.) After identification, the discussion must
be supported by relevant authorities and engage with some of the more difficult

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 Examiners’ reports 2016

questions these cases throw up such as in (c) whether a common mistake as to

existence of the subject matter of a contract renders the contract void at common
law as Courturier was first thought to suggest or whether the High Court of Australia
was correct in McCrae in suggesting that this all depends upon a proper
construction of the contract. Strong answers to (d) will also appreciate that the Sale
of Goods Act s.6 is based upon the broader interpretation of Courturier above but,
according to its own terms, is only applicable to goods which once existed but
subsequently perished and not to goods that never existed.
Poor answers to this question…
Poor answers failed to realise that all the factual variants raised different issues
about mistake. They also failed to identify the different categories of mistake and
displayed little knowledge of the distinct principles of law applicable to each.
Question 3
Critically evaluate TWO of the following statements:
a) It is very difficult to rebut the presumption that an agreement
concluded between family members or friends was not, and that
one concluded in a commercial setting was, intended to have legal
effect.
b) Silence can never amount to acceptance.
c) The definition of ‘necessaries’ in the context of minor’s contracts is
unclear and antiquated.
d) The rules concerning so called ‘anticipatory’ breaches of contract
are difficult to state and even harder to defend.
General remarks
The area of law to be discussed is expressly identified so it is not a question where
candidates should ever discuss the wrong area of law. However, each scenario
requires a discussion of the precise area of law or concepts identified. The
instruction is to critically evaluate the statements which to different degrees
overstate a point and so should be easy to criticise.
Law cases, reports and other references the examiners would expect you to
use
These will include:
(a) Most obviously, Balfour v Balfour should be discussed but this can be supported
by a number of different cases including: Jones v Padavatton; Merett v Merett and,
more recently, Granatino v Radmacher or Atrill v Dredner Kleinwort.
(b) Most obviously, Felthouse v Bindley but also Rust v Abbey Life.
(c) Nash v Inman and the Sale of Goods Act 1979 s.3(3).
(d) Most obviously, Hochester v de la Tour and White and Carter Councils v
McGregor and cases illustrating the ambit of Lord Reid’s qualification of the
innocent party’s ability to tender an unwanted performance and sue for the contract
price in debt, i.e. that the claimant must be able to tender the performance without
the co-operation of the other party and that he should have a legitimate interest in
doing so.

5
Common errors
The areas of law to be discussed are identified precisely so discussion of adjacent
and related areas will gain little or no credit. The instruction is to critically evaluate
each chosen statement. Many candidates had too much descriptive (i.e. what the
law is) and not enough critical comment.
A good answer to this question would…
be precise and very strong answers will contain an excellent level of detailed
knowledge, e.g. in (a) a knowledge of recent, as well as older, cases, in (b) an
awareness that the proposition that silence can never amount to acceptance is
probably too broad because in some circumstances the offeror should be able to
waive the right to have acceptance communicated to him. This indeed seems to be
the basis of unilateral contracts. Felthouse v Bindley obiter dicta applies the same
principle to bi-lateral contracts and was mentioned in several very good answers, in
(c) an attempt to consider the older cases in the context of modern day living and in
(d) an awareness that the qualifications mentioned only by Lord Reid necessarily
form part of the ratio of White and Carter.
Poor answers to this question…
did not have a sufficiently detailed discussion of the two selected statements and/or
were insufficiently critical. Some candidates even failed to answer two parts as
instructed with disastrous consequences.
Student extract
Q3(b)
Acceptance is defined as an ‘unqualified assent to the terms of an offer’. It
must be unconditional (Chillingworth v Ecche), communicated in actual fact
(Felthouse v Bindley), on identical; terms of the offer (Hyde v Wrench) and
the offeree must have knowledge of the offer (R v Clarke – Australian case).
Acceptance can take place in the form of words or conduct (Day Morris
Associates v Voyce) where performance of the terms of the offer can
constitute acceptance. Thus acceptance need not be communicated in actual
fact in every instance, depending on the scenario.
In the case of Felthouse v Bindley the Court laid down the longstanding rule
that silence will not amount to a valid acceptance. Such is the position
currently followed yet exceptions were laid down.
In the Hannah Blumenthal case Lord Steyn stated that the Felthouse silence
rule was not an absolute one. He continued on to state that in certain
circumstances silence may amount to a valid acceptance. For instance his
Lordship stated that the offeror may be able to treat the offeree’s silence as
acceptance where the offeror holds the belief that he may prescribe such a
method to be so and thus acts accordingly.
However, such a view may create unfairness or it may result in contracts to
which the offeree did not intend to accept thus leading to a complication in
the negotiation process as well.
When instituting the Felthouse rule, certainty is guaranteed as a legitimate
answer is required to either accept or reject the offer thus creating no room
for error or uncertainty in the negotiation process.
This effectively safeguards the position of the offeree.
Comments on extract
This extract is included to illustrate the danger of not doing the required number of
parts of a question. The discussion above addresses the topic of the question with a

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 Examiners’ reports 2016

very good level of detail on the question whether mere silence can amount to
acceptance. The standard of discussion and level of detail would merit a mark of
upper second class standard. However the candidate failed to answer two parts of
the question as directed to. The consequence is that a good upper second class
mark for half of the question becomes a fail mark for that question overall when the
required second part is not answered.
Question 4
‘The distinction between conditions and warranties should be abandoned and
all contract terms should in the future be regarded as innominate terms.’
Critically discuss this statement.
General remarks
This answer calls for a description of the types of term described in it. Conditions,
warranties and innominate terms should be described functionally and their sources
outlined. Each category should be illustrated by examples. The critical part of the
essay should build upon the earlier part and emphasise the certainty of conditions
and warranties compared to the proportionality of innominate terms. These
advantages can only all be captured in a system which has a tripartite classification.
Law cases, reports and other references the examiners would expect you to
use
Conditions may be illustrated by statute including the Sale of Goods Act 1979 ss.13,
14 and 15 and the equivalent obligations imposed by Consumer Protection Act
2015 upon traders who contract with consumers. Further illustrations will be: where
the parties classify the term themselves as in Schuler v Wickman and Lombard v
Butterworth, trade custom as in the Mihalis Angelos and time stipulations in
commercial contracts as in Bunge v Tradax. Warranties are of course all other
terms the remedial consequences of which are stipulated in advance. Where the
consequences of breach are not known in advance, the term is classified as
innominate or intermediate. The emergence of such terms is associated with Hong
Kong Fir Shipping v Kawasaki.
Common errors
There were no particular recurrent errors.
A good answer to this question would…
act upon the instruction to ‘critically discuss’ the statement. The advantages of, on
the one hand conditions and warranties, which promote certainty, will be contrasted
with innominate terms which appear to promote proportionate justice between
contractors.
Poor answers to this question…
often lack structure and descriptive detail and any developed critique of law as
expressly required by the question.
Question 5
Lady Godiva is short of money and so decides to sell a painting, her Rolls-
Royce car and a gun. Three potential purchasers visit her on 1 February,
Charles, Sabena and Toby.
Charles, a well-known collector of modern art, arrives to view the painting of a
fish. Lady Godiva says it is one of a series of paintings of ‘Topes’ (a type of
fish) by Ham, a famous painter. Charles tells Lady Godiva he will think about
it and leaves.

7
Sabena arrives to view the Rolls-Royce car. Lady Godiva tells her that it was
the car the Queen rode in at her Silver Jubilee celebrations (which Lady
Godiva believes to be true) and that there are pictures of the event in the car’s
‘glovebox’. Sabena tells Lady Godiva that she remembers the event well as
she watched it on TV. Sabena does not inspect the pictures but immediately
resolves to buy the car. However, she pretends not to be interested in the
hope that Lady Godiva will reduce the price. ‘I may be interested, I’ll be in
touch’, says Sabena.
Toby comes to look at the gun which Lady Godiva says ‘is in perfect
condition’ and ‘so accurate it will make anyone look like an expert shot’. Toby
has embarrassed himself many times when shooting and so is very interested
despite noticing a crude repair to the barrel of the gun. He says he will get in
touch.
On 1 April Lady Godiva receives phone calls from her three visitors. Sabena
offers to buy the car for £250,000, Charles, the painting for £500,000, and
Toby, the gun for £50,000. Lady Godiva accepts these offers and the goods
are all collected the next day.
A year later the following events occur:
a) Charles is visited by Ham who laughs when he sees the painting and
says it is a fake. Lady Godiva was in fact aware that it was a copy.
Charles is especially annoyed because he had been offered another
picture at the same time for the same price which he turned down to
buy the fake ‘Tope’. The other painting which Ham confirms was
genuine recently sold for £2 million.
b) Sabena, who had completely forgotten about the pictures in the
glovebox, discovers them. They clearly show the Queen in a
different car. Sabena has been using the car to hire out for wedding
parties and so had resprayed the car in pink and gold.
c) While Toby is shooting, the gun explodes but he is not injured.
Advise Charles, Sabena and Toby why any statements made to them might be
classed as ‘mere representations’ rather than terms and, if so classified, what
remedies for misrepresentation may be available to them.
General remarks
The question is about misrepresentation. This is made clear by the instruction at the
end of the question which directs the candidate to discuss whether any statements
made were ‘mere representations’ (i.e. they were not terms of the contract) and if so
what remedies for misrepresentation may be available. Discussion of other issues
that are not relevant to these questions will fail to gain credit.
The factors that determine whether a statement is regarded as a term or a mere
representation must be considered and applied (see below) before outlining the
general requirements of an action for misrepresentation (see further below).
The question was reasonably well answered but many answers were poorly
structured and lacked detail.
Law cases, reports and other references the examiners would expect you to
use
With regard to the issue whether the statements were terms or mere
representations the factors to be applied are:
(1) Any time lag between the making of the statement and the eventual
conclusion of the contract, e.g. Routledge v McKay.

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 Examiners’ reports 2016

(2) Whether the representor or representee had greater skill and knowledge in
relation to the thing said, e.g. Oscar Chess v Williams; Dick Bentley v
Harold Smith Motors; Esso v Mardon.
(3) The importance of the thing said, e.g. Bannerman v White.
(4) Whether the statement was accompanied by a recommendation that it be
verified, e.g. Ecay v Godefroy.
The general requirements of a misrepresentation should be outlined, i.e. a
statement of fact that induces the contract.
Charles – misrepresentation is fraudulent so Derry v Peake. Right to rescission not
subject to bar of lapse of time: Leaf v International Galleries or the
Misrepresentation Act s.(2)
Sabeena – no fraud within Derry v Peake. For rescission, consider inability to make
restitution Erlanger v New Sombrero and the Misrepresentation Act s.2(2). For
s.2(1) damages consider Howard Marine Dredging v Ogden and Gran Gelatto v
Richcliff on contributory negligence.
Toby – is the contract induced by the misrepresentation? Consider Atwood v Small.
If misrepresentation is made out, rescission may be unavailable due to inability to
make restitution, see Erlanger above and, for damages under s.2(1), consider
possible reduction for contributory negligence as in Gran Gelatto above.
Common errors
Several answers ignored Toby altogether because they presumably could not
identify any legal issue raised. With regard to remedies the discussions were often
jumbled with little structure.
A good answer to this question would…
Use a number of authorities to back propositions of law and very good answers by
the ability to recognise the parallel availability of remedies (say damages and
rescission or different routes to the recovery of damages say under the
Misrepresentation Act s.2(1) and for the tort of fraud) and to state which would be
the best to pursue.
Poor answers to this question…
often lack structure and fail to examine in a clear way the availability of different
remedies for misrepresentation arising from the same set of facts. Weak answers
also failed to distinguish the claims of the different characters. Other answers spent
too much time discussing the question whether the statements were terms or mere
representations and so did not spend sufficient time discussing liability and
remedies available for misrepresentation.
Question 6
‘The old common law ‘exceptions’ to the doctrine of privity of contract are
irrelevant now that we have the Contracts (Rights of Third Parties) Act 1999.’
Critically evaluate this statement.
General remarks
This question required a balance between description and of the law and criticism of
it. The descriptive part will commence with a statement of the doctrine noting that it
has two parts: contracts may not be enforced by third parties and third parties are
not subject to burdens arising from contracts to which they are not a party. An
account of the common law exceptions to the doctrine should follow, especially to
the part which prevents third parties receiving the benefit of a contract to which they
are not a party. A good account of the provisions of the 1999 Act should follow.

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Law cases, reports and other references the examiners would expect you to
use
The general rule is supported by Dunlop v Selfridge and Tweddle v Atkinson. The
exceptions will require a discussion of Beswick v Beswick; The Eurymedon;
Scruttons v Midland Silicones; Jackson v Horizon Holidays and in better answers
Linden Gardens v Lenesta Sludge. This should be followed by a discussion of the
Contracts (Rights of Third Parties) Act 1999 starting with the exception introduced
in s.1(1) especially that in s.1(1)(b) and the requirements of the double intention
test. Some early cases considering the Act could include: Nisshin Shipping v
Cleaves and Prudential Assurance v Ayres. Other important sections are s.1(3) on
express identification of the third party, s.2 on variation and cancellation and the
preservation of: the old common law exceptions under s.7(1) and under s.4 rights of
the contracting party which, if exercised, would effectively secure for the third party
the benefit of the contract to which he is not a party.
Common errors
There were no obvious recurrent errors beyond a lack of detailed knowledge.
A good answer to this question would…
distinguish between the true exceptions to the rule such as: the trusts exception,
assignment, agency and an action in tort and the ‘quasi exceptions’ of action by the
promisee that will effectively secure for the third party the benefit of a contract to
which they were not a party. Very strong answers might engage in a discussion of
what constitutes an ‘exception’.
Poor answers to this question…
Weaker answers are often over general and unable to distinguish between the
‘benefit’ and ‘burden’ sides of the doctrine, between exceptions and analogous
circumstances and do not appear to have a sufficiently deep and detailed
understanding of the provisions and operation of the 1999 Act.
Question 7
The Strolling Bones are an ageing rock band who now enjoy the better things
in life. They contract with Excess University Student Law Society to appear at
their annual dinner for a fee of £200,000 and 20 cases of Chateau Latour wine.
It is agreed that the fee shall be payable and the wine deliverable in two
stages: half on signing and half on the day of the performance. The Student
Law Society make the first payment but do not deliver any wine to the band.
The Strolling Bones pay a non-refundable deposit of £5,000 when they book
two large lorries to transport their equipment. The Student Law Society spend
a large sum of money on publicity. The venue at which the annual dinner is to
take place fails its safety inspection the day before the performance and the
dinner is cancelled.
Advise the Strolling Bones as to their rights and liabilities.
General remarks
The question is about the effect upon a contract of an event that took place after
the contract was signed. The timing of the event after, and not before the signing of
the contract means that there is no issue of mistake. Further, as this event (the
failed safety inspection) is not caused by the fault of either party, the issue to be
discussed is frustration rather than breach. Students should introduce the doctrine
in general terms and quickly discuss its application to the specific facts of this case.
Awareness of the Gamerco case should have caused students to ‘think frustration’.
However, a significant number of answers missed the frustration issue completely
instead writing broad descriptive answers about consideration, the part payment of

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 Examiners’ reports 2016

debts (presumably based upon the failure to deliver the wine) and some about
anticipatory breach. Those who wrote about frustration generally scored well.
Law cases, reports and other references the examiners would expect you to
use
The contract is frustrated because the performance of the contract has become
illegal. The Spolka case can be mentioned but the most relevant is the Gamerco
case.
Under the Law Reform (Frustrated Contracts) Act 1943 s.1(2), it would appear that
the £100,000 paid is recoverable and that the other £100,000 payable ceases to be
payable. There is, however, a proviso to s.1(2) which gives the court a broad
discretion to allow some of the £100,000 to be retained to offset expenses incurred
such as the non-refundable deposit. The wine raises an issue a better answer
should spot (see below).
The final remedial issue is whether there is any ‘valuable benefit’ to the band from
the publicity for which they may have to pay for under s.1(3) as in BP v Hunt.
Common errors
The major error was failing to identify the question as raising frustration. However,
some of those who had a basic knowledge of when frustration occurred did not
have an equal understanding of the rights and remedies of the parties both at
common law and under the 1943 Act.
A good answer to this question would…
display a sound knowledge of the different categories of frustration and that these
facts belonged to the category where performance of the contract has become
illegal. Strong answers displayed a good knowledge of the key subsections of the
1943 Act.
The wine raises an issue a better answer should spot. Section 1(2) will not apply to
the obligation to supply the wine because the section only applied to payments of
money. Therefore, the common law applies and so, while the obligation to supply
the second instalment of wine is discharged, the obligation to supply the first
instalment has already accrued and so is enforceable. Chandler v Webster is the
most obvious authority that strong answers may refer to here.
BP v Hunt is a very difficult case and better answers distinguished themselves with
a good discussion of this case in relation to s.1 (2).
Poor answers to this question…
Poor answers lacked detail throughout but especially with regard to the operation of
the different provisions of the Law Reform (Frustrated Contracts) Act 1943.
Question 8
In January 2015, Professor Dim signed a contract with Cambridge Academic
Press (CAP) to write a book on contract law in their prestigious Masterclass
series. Dim was to be paid £20,000 and CAP had an option to employ Dim to
write a companion book on property law for a £25,000 fee. Over the next year
Dim spent £5,000 on books and travel to libraries while working on his new
book. In January 2016 in breach of contract CAP terminate the contract with
Dim because CAP had recently contracted with Professor Genius to write a
contract law book in the Masterclass series. CAP invited Dim to publish his
contract book for a fee of £100 in a new series aimed at school students. The
Head of the School of Law had promised Dim that he would receive a special
payment of £10,000 if his book was published in the Masterclass series. Dim
writes to CAP telling them he feels humiliated by the way he has been treated

11
and pointing to a clause in their contract which he had inserted before the
parties signed and which CAP overlooked:
If the contract is terminated by the publishers in breach of contract, they shall
pay to the author a penalty of £10,000.
Advise Dim as to what remedies he is entitled to in respect of CAP’s breach of
contract.
General remarks
This question was about remedies for breach of contract. The instruction at the end
of the question made this clear; candidates were expressly directed to advise Dim
as to the remedies he is entitled to as a result of CAP’s breach of contract.
Consequently, no credit can be gained for discussing any other contract doctrines.
Many candidates seemed to miss this important and obvious pointer and so the
question was very poorly answered in the main. This might reflect a tendency to
attach less importance to remedies for breach of contract in teaching and revision,
perhaps because it is often placed at the end of a course.
Law cases, reports and other references the examiners would expect you to
use
Is Dim entitled to specific performance (SP)? SP is not usually available for breach
of a contract of personal service: Giles v Morris and the principle of mutuality would
prevent the specific enforcement of a contract when specific performance would not
be ordered against the party now seeking it: Page One Records v Britton.
Can Dim seek liquidated damages under the contract clause? The contractual
description as a penalty is irrelevant Dunlop v New Garage. The main authority is
now Cavendish Square Holdings BV v Makdessi and Parking Eye Ltd v Beavis
[2015] UKSC 67 and full credit should be given to students who refer to the decision
in the Supreme Court. Students might note that he SC chose to restate, but not to
abolish, the penalty rule. Further, the previous rule that in a contract between
‘properly advised parties of comparable bargaining power’ (Phillips HK v A-G HK)
there should operate a ‘strong initial presumption’ of enforceability was endorsed.
If Dim seeks unliquidated damages, he could claim his reliance £5,000 losses
Anglia TV v Reed, McRae v CDC. Alternatively, (he could not claim both C & P
Haulage v Middleton) he could seek expectation losses which could include: the
£25,000 fee, possibly something in respect of the lost chance of publishing the
companion book (Chaplin v Hicks, Giedo van der Garde v Force India Formula 1)
and also the lost £10,000 bonus. If this ‘promised’ bonus was a matter of
entitlement if the book were published, its recovery from CAP would depend upon
the application of the remoteness rules: Hadley, Victoria Laundries, Heron 11 and
the Achilleas.
Dim might also seek damages for non-pecuniary loss but these are more commonly
awarded in consumer contracts, Jackson, Jarvis, etc. though the test applied in
Farley v Skinner is now more generous to recovery. Unliquidated damages would
be subject to reduction if Dim had not acted reasonably to mitigate his own losses.
This might extend to accepting the offer to publish in the less prestigious series:
Payzu v Saunders.
Common errors
Many students simply failed to discuss remedies and instead wrote about exclusion
clauses.
A good answer to this question would…
discuss the availability of specific performance, liquidated damages and
unliquidated damages. There was an opportunity for students to display a
knowledge of the recent decision of the Supreme Court in Cavendish Square

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 Examiners’ reports 2016

Holdings BV v Makdessi and Parking Eye Ltd v Beavis [2015] UKSC 67 which is the
first time the UK’s highest appellate court has addressed the availability of
liquidated damages for almost a century. Full credit was given to any students who
were aware of the decision. Strong answers also distinguished themselves by their
discussion of unliquidated damages and their understanding and application of the
principles of remoteness of loss.
Poor answers to this question…
included irrelevant material despite the clear instruction directing them to the
relevant areas of law. There was no exclusion clause in the factual scenario but this
did not stop some candidates from writing at some length about the different
mechanisms for the control of exemption clauses.

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 Examiners’ reports 2017

Examiners’ reports 2017

LA1040 Contract law – Zone A

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.

1
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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 Examiners’ reports 2017

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) Frustration can never be self-induced.
b) To revoke a unilateral offer the offeree must receive actual notice of
the revocation.
c) Damages for breach of contract are never based upon the gain made
by the party in breach.
d) Specific performance is never available when such a remedy would
require the ‘constant supervision’ of the court.
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
difficult to achieve. More seriously, some only answered one question – making it

3
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.
Law cases, reports and other references the examiners would expect you to use
In each option chosen there should be a balance between description and criticism.
a) Consider Ocean Trawlers and The Super Servant 2 cases.
b) The statement plainly contradicts the good sense of Shuey v US.
c) Consider especially Blake. Good answers will be aware of subsequent
cases as well as perhaps antecedents such as Wrotham Park.
d) Discussion of the exceptional nature of SP as a remedy could precede an
account of this particular bar, which would centre on Co-op v Argyle.
Common errors
a) A popular choice but far too many students failed to focus on the specific
question and wrote generally about the doctrine of frustration. Could not
pass without thorough discussion of the meaning of self-induced frustration
with reference to the specific cases above.
b) Too much time wasted on a description of unilateral offers and the details of
the Carlill case. The focus needed to be on revocation and how that can be
achieved in a unilateral situation.
c) This was a difficult question and very few got close to answering it well,
resorting to general principles of contractual damages. Students seemed
unfamiliar with the principles of restitutionary remedies and the Blake case.
d) Again poorly answered with little more than a cursory discussion of the
nature of SP with little by way of example and case law.
A good answer to this question would…
answer two questions of a reasonably similar length and level of detail identifying
the specific principle and supporting case law. Take a view on the statement and
either agree or disagree with it supported by concise analysis.
Poor answers to this question…
failed to address the question and just provided a generic description of an area of
law.
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 desktop 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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 Examiners’ reports 2017

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.
Law cases, reports and other references the examiners would expect you to use
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.
A good answer to this question would…
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

5
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.
Poor answers to this question…
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
Prince Felix wants to improve his palace grounds for his grandchildren. He
decides to build a large swimming pool and a small fairground.
Prince Felix entered into a contract with Greta to build the swimming pool for
£1 million payable on completion. The contract provides for completion of the
swimming pool by 1st March.
Prince Felix entered into a contract with Hans to build the fairground for £9
million payable in three equal instalments: on signing the contract; on the
commencement of work; and on completion. The contract provides for the
completion of the fairground by 1st October.
When work commences on the swimming pool, Greta encounters harder
ground than she anticipated and demands an extra £100,000 to cover her
increased costs. Prince Felix cannot find any other builder with the expertise
to complete the contract on time and so agrees without protest so that the
pool will be completed in time for his granddaughter Elsa’s birthday
celebrations. On completion of the swimming pool on 1st March, Prince Felix
refuses to pay Greta any more than £1 million.
Prince Felix pays Hans the first and second payments as required by the
contract. Prince Felix’s palace then suffers extensive damage in a fire, which
will be costly to repair. Consequently, he tells Hans that he will not be able to
make the final payment and so Hans offers to reduce it by one third to £2
million. Hans then regrets agreeing to reduce the final instalment and
demands the original amount offering Prince Felix an extra three months to
find the money.
Advise Prince Felix as to his possible rights and liabilities.
General remarks
A question requiring a discussion of consideration and related principles. It was
important to identify that this question raises issues of contract modification rather
than formation; time was often wasted discussing offer and acceptance, which is
irrelevant.
Law cases, reports and other references the examiners would expect you to use
Need to analyse each contract separately, as follows.
Contract with Greta
No frustration, Davies v Fareham although this may only be noted by better
answers. Is there consideration for the variation? Consider Stilk and especially
Williams v Roffey – practical benefit in completing in time for birthday party. If there
is consideration, reflect whether there is economic duress. State the requirements
from Pao On and examine especially the relevance of the absence of protest, Atlas
v Kafco and the lack of any other practicable choice, The Atlantic Baron.
Contract with Hans
Is there consideration for the variation? Consider especially the applicability of the
W v R practical benefit test in the light of the CA decision in MWB Business
Exchange Ltd v Rock Advertising Ltd (2016), which recognised an expanded

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 Examiners’ reports 2017

application of the practical benefit test. The resultant status of Re Selectmove might
also be considered by the very best answers.
If no consideration is found, the application of promissory estoppel should be
examined. Its requirements should be discussed: unequivocal promise, Hughes,
reliance as defined in the Post Chaser and the party setting up the estoppel must
have acted equitably, D and C Builders. If an estoppel is established, consider if it
has suspensory or extinctive effect Tool Metal and the obiter statements in the
MWB Business case above.
Common errors
Knowledge shown of the W v R test and the principles of promissory estoppel but
not applied correctly to the two scenarios. Discussing offer and acceptance and
contract formation rather than modification. Focusing on irrelevant points (such as
the fire and whether it frustrated the contract – no impact on the two key contracts).
A good answer to this question would…
identify the existing contractual relationship in each case, analyse the promise
made and the extent to which any consideration can be found in support by
reference to the above cases and principles.
Poor answers to this question…
demonstrated the errors referred to above and were poorly structured with muddled
thinking.
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 £20 million. Romeo does not
know much about Mario but offers to buy him as Colin ‘only’ wants £5 million
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 £10 million 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.
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

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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.
Law cases, reports and other references the examiners would expect you to use
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.
A good answer to this question would…
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.
Poor answers to this question…
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

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 Examiners’ reports 2017

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
‘It is difficult to state clearly, and harder to defend, the law relating to the
effect upon any agreement of a mistake of identity.’
Discuss.
General remarks
This was a straightforward question, which merely required a description of the
leading cases in this area of law, drawing comparisons, pointing out contradictions
and giving a view. It was not a very popular question but those that answered it
mostly did so well. Easy to get a decent mark but quite difficult to get a stand out
mark.
Law cases, reports and other references the examiners would expect you to use
An outline of the general law required describing the key cases on the two distinct
categories of mistaken identity – face-to-face (Philips v Brooks, Lewis v Averay and
Ingram v Little) and in writing (Cundy v Lindsay, King’s Norton Metal and Shogun
Finance Ltd v Hudson).

9
Common errors
Just describing facts of cases without drawing out any principles. Not contrasting
critically the different approaches. Discussing other types of mistake that are
irrelevant.
A good answer to this question would…
engage in constructive criticism of the contrasting cases, explain the dilemma when
faced with disappointing one innocent victim of a rogue’s false identity, Discuss the
different treatment of written contracts when compared to face-to-face contracts and
the reasons for that – who should the risk lie with.
Poor answers to this question…
fell into the trap of a rambling descriptive piece with poor structure and lacking any
critical analysis.
Question 7
Sarki is a generous and wealthy art collector. Advise him in all the following
alternative circumstances:
a) After his favourite picture, ‘Van Gogh’s Missing Ear’, is stolen Sarki
offers a reward for its return. Inspector Maigret, a policeman
working on the theft, locates the picture and claims the reward.
b) After the theft of ‘Painting of a Sunflower’, Poirot, a private
investigator, is employed by the insurer of the picture to recover the
picture. Poirot locates the picture and claims the reward.
c) After reading in a newspaper about Rose a 19-year-old genius, who
has just completed her PhD, Sarki writes to her and promises her
£1,000 for working so hard over the past year.
d) As (c) except that Sarki had also contacted Rose when she was 18
urging her to work hard.
e) Sarki tells Jane, the butler, that she can use his car for a rent of £1
per month.
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.
Law cases, reports and other references the examiners would expect you to use
a) Consider whether the promise to perform a duty already owed under the
general law is good consideration, Glasbrook and the football cases, Harris
and now Leeds United v Chief Constable of West Yorkshire.
b) Consider whether the promise to perform a pre-existing contractual duty
owed to a third party (the insurance company) is good consideration. Here
the Eurymedon rather than Pao On is a better analogy as Sarki has made a
unilateral offer.
c) Consider past consideration, Eastwood v Kenyon.
d) Past consideration again but this time the act, like that in Lampleigh v
Braithwaite was done at the prior request of the promisor. Although, it was

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 Examiners’ reports 2017

not performed in the reasonable expectation of payment as required by Re

Casey’s Patents and Pao On.
e) Discuss the rule that the law does not enquire into the adequacy of
consideration, Thomas v Thomas being most obviously relevant.
Common errors
Parts (a), (c) and (e) were the better answered with most spotting the key issues as
above. Many failed to spot the third-party issue in (b) and there was confusion in (d)
as to whether Rose was a minor at 18. Answers were often not methodical in
analysing the nature of the promise and then identifying whether consideration in
some form was present.
A good answer to this question would…
describe in each case the nature of the promise, whether it was supported by
consideration and the relevant case law as above.
Poor answers to this question…
had little structure, missed the key points and discussed offer and acceptance rather
than consideration.
Question 8
‘The Contracts (Rights of Third Parties) Act 1999 made a fundamental change
to English Contract Law.’ (E McKendrick)
Discuss to what extent the above statement is true and whether any change
made has improved the law.
General remarks
The question calls for a description of the changes made by the Act especially the
third party right of action introduced by the Act. Better answers distinguished
themselves by the sophistication of their assessment as to whether the law has
been improved.
Law cases, reports and other references the examiners would expect you to use
An analysis of the doctrine of privity prior to the Act, focusing particularly on the
unjust outcomes where third parties could not sue under a contract even where it
had been created for their benefit – e.g. Beswick v Beswick, Tweddle v Atkinson,
Dunlop v Selfridge. An explanation of the purpose of the Act and the effect of
s.1(1)(a) and (b), which permit a third party to sue and the difficulties in
interpretation. Evaluate the difficulties of the common law and the Act co existing,
with reference to some post-Act cases, e.g. Nisshin, Prudential and Cavanagh.
Common errors
A general description of the law of privity with little discussion of the Act. Simply
copying out large sections of the Act without any explanation or commentary. No
critical evaluation of the effect of the Act.
A good answer to this question would…
demonstrate a good understanding in a clear and logical structure of the concerns
about the privity doctrine, the wrongs the Act was intended to address, how it
sought to do that and whether it has been effective in light of recent case law.
Poor answers to this question…
wrote a general pre-prepared essay about all aspects of privity with minimal
description of Act and its consequences.

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 Examiners’ reports 2017

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.

1
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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 Examiners’ reports 2017

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

3
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.
Law cases, reports and other references the examiners would expect you to use
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.
A good answer to this question would…
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.
Poor answers to this question…
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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 Examiners’ reports 2017

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.
Law cases, reports and other references the examiners would expect you to use
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.
A good answer to this question would…
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

5
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.
Poor answers to this question…
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.
Law cases, reports and other references the examiners would expect you to use
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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 Examiners’ reports 2017

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.
A good answer to this question would…
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.
Poor answers to this question…
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.

7
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.
Law cases, reports and other references the examiners would expect you to use
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.
A good answer to this question would…
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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 Examiners’ reports 2017

Poor answers to this question…

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.

9
Law cases, reports and other references the examiners would expect you to use
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.
A good answer to this question would…
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.
Poor answers to this question…
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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 Examiners’ reports 2017

Law cases, reports and other references the examiners would expect you to use
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
A good answer to this question would…
give equal weight to all parts and clear case law examples in support of the
principles as outlined above.
Poor answers to this question…
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:

11
 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.
Law cases, reports and other references the examiners would expect you to use
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.

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 Examiners’ reports 2017

A good answer to this question would…

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’.
Poor answers to this question…
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.

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 Examiners’ reports 2018

Examiners’ reports 2018

LA1040 Contract law – Zone A

Introduction
The Contract law paper followed the same format as previous years 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.
I always raise the same concern about timing and students would do well to take
note of the need to spend equal time on each of the four questions. Answering only
three questions very often makes achieving even a bare pass extremely difficult.
Even three 2:1 marks (e.g. 62 each) but no fourth question achieves an overall
mark of only 47. Spending excessive time on the first two questions and very little
time on the next two has a similarly dramatic impact on the overall mark. 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.
For problem questions we regularly see a reasonable discussion of the law but very
little attempt to apply it to the specific facts. Another common fault is the lack of
structure when analysing a problem, meaning muddled outcomes or elements of
the problem not addressed in the answer. In particular many students overlook any
‘add on’ question at the end (e.g. ‘would your answer be different if….’), therefore
missing the opportunity for a couple of extra marks.
The instruction at the end of each question should be read very carefully – it may
say who you must advise in a problem question and/or direct you to the particular
area of law to be addressed.

Comments on specific questions

Question 1
Anna owns a shop that sells expensive watches. On 1st March Boris
telephones the shop and asks if Anna would like to buy his Rolex watch.
Anna says that she is ‘certainly interested but would need to inspect the
watch first’. On 2nd March at 10am Boris visits the shop and says: ‘This is the
watch; it’s yours for £10,000.’ Anna replies ‘I like it a lot but £10,000 is too

1
much for me.’ Boris responds ‘That’s okay, have a think about it and I will
keep the offer open until midday on 4th March.’
Later on 2nd March, after Boris has left, Anna realises that the watch would
make a good gift for her son’s upcoming 18th birthday. She calls Boris and
offers him £8,000 for the watch which Boris refuses. Anna says she will need
to speak to her partner before offering any more. When they speak Anna’s
partner tells her that she should offer the full price. Anna immediately rings
Boris and leaves a voice message saying she would like to buy the watch for
£10,000 and will assume this is acceptable unless Boris tells her otherwise in
the morning. She adds that she will go to Boris’s house at 1pm the following
day to pay for it. Boris was attending an evening business meeting when
Anna rang. At the meeting Boris met Chas. Chas noticed the watch which he
liked a lot and so immediately offered Boris £10,000 for it which Boris
accepted.
At 1pm on 3rd March Anna goes to Boris’s house to collect and pay for the
watch. Boris is surprised as he got home late from his meeting and overslept
and so had not yet listened to his voice messages.
Advise Anna.
General remarks
This question was answered by most students and was reasonably well done by
most. Better answers were clearly structured working through the steps. It
addresses issues of offer and acceptance in a variety of situations with a view to
determining if and when an agreement is reached between the parties.
Law cases, reports and other references the examiners would expect you to use
Discuss status of the phone call on 1 March – not an offer but an invitation to treat
as price uncertain (Gibson etc.). Boris makes an offer to sell which Anna rejects –
effect of counter offer is to bring offer to an end: Hyde v Wrench. Offer to hold open
not enforceable: Dickinson v Dodds. Anna makes offer to buy on 2 March, which
Boris rejects: Hyde v Wrench. Anna’s voicemail on 2 March is not an acceptance –
the offer from B has gone – it’s an offer. Effect of answer machine: Brimnes. Can
silence amount to acceptance: Felthouse v Bindley; Rust v Abbey Life? Likely that
overall no agreement between Anna and Boris.
Common errors
Not working through each step logically and failing to understand the effect of a
counter offer on the original offer. Misunderstanding A’s answer message as an
acceptance with a consequential impact on the rest of the answer. Too much
general narrative about offer and acceptance with irrelevant cases.
A good answer to this question would…
work logically though each step analysing the status of the communication and
supporting with the relevant case law. Reach a conclusion at each stage as to
whether there is an agreement at any time. Strong answers would recognise that
there is no consideration for the promise to hold the offer open.
Poor answers to this question …
spent too long on a general introduction about offer and acceptance and failed to
apply the law to the facts. They were inconsistent in working through the steps
using the terms offer and acceptance in a loose and non-legal way, failed to support
assertions with case law and failed to apply the legal principles to the facts.
Question 2
(a) ‘Consideration need not be adequate but it must be sufficient.’
Discuss.

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 Examiners’ reports 2018

(b) Dirk, who is disabled, returns to his car after work to find that someone
has syphoned off the petrol. He informs Eva, a passing police officer,
who says ‘Don't worry, I will get the person who did this’. Dirk replies
‘Thank you, if you do I will pay you £100’. Fiona overhears this
conversation and offers to go and get some petrol for Dirk. Dirk gives
Fiona a can and £10 to pay for the petrol. When Fiona returns Dirk says
‘Thank you for your trouble. I do not have any more money with me but
I want to give you £20 for getting the petrol’.
Eva caught the thief but Dirk now refuses to pay Eva or Fiona anything.
Advise Eva and Fiona.
General remarks
A popular question about consideration which was generally well answered. Split
into two parts, the first being a short essay and the second two problem scenarios.
Marks were lost by either very perfunctory answers to part a) or, conversely, very
long answers to part a) containing much irrelevant material. Less commonly, only
one of the two scenarios in part b) was answered. Too often decent knowledge was
shown but there was a lack of application to the facts.
Law cases, reports and other references the examiners would expect you to use
(a) Give the classic definition of consideration and go on to explain the meaning
of the given statement – only certain things will be recognised as
consideration but if they fit that category then there is no further enquiry into
the equivalence of the exchange. Refer to cases such as Thomas v Thomas,
Chappell v Nestle, Ward v Byham, Edmonds v Lawson.
(b) Eva – is a pre-existing duty good consideration? Identity public duty: Collins v
Godefroy; Glasbrook v Glamorgan; Leeds United v CC West Yorks.
Fiona – consideration is past: Lampleigh v Braithwaite; Re Casey’s Patents;
Re McArdle.
Common errors
In addition to the timing issues mentioned above, often only focused on one or two
cases in part a) and gave too little detail. Or wrote out all the standard rules about
consideration rather than sticking to the issue about adequacy.
Good answers to this question would…
stick to the issues of adequacy of consideration and illustrate it with three or four
cases explaining how the rule is applied by the courts. And in part b deal with each
issue separately supported by cases and considering whether the legal tests are
met on the facts (e.g. is it within the scope of Eva’s duty or not?). Does Flora fit any
of the exceptions to the past consideration rule?
Poor answers to this question…
contained all the student knew about consideration in part a) or set out the rules
with no case law in support. Got drawn in to long discussion about the modification
cases involving consideration in part b) and missed the point about past
consideration.
Student extract
(a) The statement that ‘consideration need not to be adequate but it must be
sufficient’, is one of the rules governing the doctrine of consideration. In order
to discuss this statement, we must consider this doctrine and its significance
in the English contract law and then move on to the discussion by
considering relevant case laws.

3
 The law requires contracts to reach a certain stage in order to be enforceable
by court. Consideration is one of the most important doctrines which is
referred to as ‘Badge of enforceability’. Consideration was defined in ‘Currie v
Misa’ as: may either consist of some interest, right, profit or benefit accruing
to the one party or some forbearance, detriment, loss of responsibility given
suffered or undertaken by the other party’.
There are some principles which are essential to the doctrine of
consideration. These include that consideration need not be adequate but it
must be sufficient (Thomas v Thomas), Past consideration is not a good
consideration (re McArdle) and that consideration must move from promisee
to promisor (Tweddle v Atkinson). We are concerned with the first principle so
we will consider it in turn.
In ‘Thomas v Thomas’, it was held that consideration needs to be sufficient
but not adequate when £1 was the rent of house was considered to be
sufficient. Court stated that there should be something of value that the court
can recognise but there is no requirement of proportionality. The court will not
be concerned if someone has made a bad bargain. Similarly in ‘Chappel v
Nestle’, wrappers were considered to be of sufficient value. However, it was
argued by ‘Atiyah’ that wrappers had no economic value so are not sufficient
to amount to consideration. ‘Treitel’ counter argued this by saying that
‘Atiyah’ failed to take into account the fact the consideration needs to be
sufficient not adequate. Another argument put forward is that the wrappers
were actually of economic value in a way that more product was brought for
collection of these wrappers which benefitted Nestle. Furthermore, in ‘White v
Bluett’, a son’s promise to father for not complaining was considered
insufficient to be consideration. Although, it can be argued that the fact that
the son didn’t complain it was beneficial for father and could have been
considered as sufficient. In ‘Hammer v Sidway’, however it was found that
Nephew’s promise to refrain from doing that the uncle prohibited (despite the
freedom – Treitel), constituted consideration. Therefore, it can be argued that
this principle is not completely certain and precise demarcation is hard.
Treitel commented that consideration ‘must be of some value’ although it
‘cannot be precisely quantified’.
Comments on extract
Part of a much longer answer, which scored a mid-2:1 mark. It contains all the key
cases plus some academic commentary and shows an understanding of the
concept.
Question 3
‘The doctrine of intention to create legal relations adds an unnecessary
requirement for the formation of a contract.’
Discuss.
General remarks
This essay question about intention to create legal relations was well answered by
those that attempted it. The best answers made some evaluative comments as to
whether the doctrine is an ‘unnecessary requirement’.
Law cases, reports and other references the examiners would expect you to use
Outline the nature of the doctrine with the classic case of Balfour v Balfour. Explain
how presumption of enforceability works in domestic cases (e.g. Soulsbury v
Soulsbury) and commercial cases (e.g. Kleinwort Benson v Malaysia Mining). Refer
to more recent cases such as Jones v Padavatti and Wilson v Burnett. Could refer

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 Examiners’ reports 2018

to pre-nuptial agreements (e.g. Radmacher v Granatino). Strong answers may refer

to two 2017 cases in this area: Blue v Ashley and MacInnes v Gross.
Common errors
Most students understood the topic they were discussing so no ‘errors’ as such but
bland essays without clear case law and a lack of understanding of the different
approach in domestic and commercial settings were common.
A good answer to this question would…
not only analyse older and more recent case law correctly with a clear
understanding but also comment critically as to whether the doctrine was
necessary, why it may not be desirable to attach legal consequences to every
agreement and how the doctrine interacts with principles of agreement and
consideration.
Poor answers to this question…
were vague about how the doctrine operates, quoted insufficient cases in support
and failed to evaluate the need for the doctrine.
Question 4
General remarks
This was answered by a reasonable number of students and fairly well done. It’s an
essay about mistaken identity – a specific type of unilateral mistake. Wider
discussions about the law of mistake in general do not gain any credit – the answer
needs to be focused. The student also needs to express a view as to whether they
feel the current state of the law is indeed ‘complex and inconsistent’.
Law cases, reports and other references the examiners would expect you to use
Explore the cases where contract concluded at a distance (e.g. Norton Metal,
Cundy v Lindsay and Shogun Finance). Explore and contrast with the face to face
cases: Philips v Brooks, Ingram v Little, Lewis v Avery. Refer to Devlin LJ’s
proposal in Ingram that losses could be shared between the party deceived and the
innocent third party.
Common errors
Although the topic was well signposted in the question too many student wrote a
general essay about all aspects of mistake – sometimes pages about common
mistake/cross purpose mistake etc. with mistaken identity only a small part of the
overall answer. Also a lack of discussion about the impact of mistaken identity and
where the losses fall.
A good answer to this question would…..
focus on the narrow remit, set out in detail the classic cases, compare the face to
face and the distance case and comment on the outcomes for wronged parties.
Take a view on whether the law is indeed complex and inconsistent.
Poor answers to this question…
were generic essays about all aspects of mistake and omitted any critical
evaluation.
Question 5
Ivan Earing is the University of Blue Skye’s dynamic, but naive, Vice
Chancellor who is developing an ‘electronic campus’ to reduce staff costs. He
hears about a new robotic professor being sold by Logik plc. Ivan visits Logik
to see a demonstration of the robot which is called ‘Professor Bright’. Ivan is
so impressed he immediately signs a contract to buy one for £200,000 for the
Law School. The contract contains the following provision:

5
1. Logik plc gives no warranty or assurance that any equipment provided
is of satisfactory quality.
The robot is delivered to the campus where Lurch takes delivery. Lurch signs
a document headed ‘Delivery Note’ which repeats term 1 above but also has
the extra clause below:
2. Logik plc shall not be responsible for any damage to property caused
by their equipment.
Ivan attends the robot’s first lecture in the Law School when ‘Professor
Bright’ appears to get very excited when discussing the doctrine of past
consideration and waves ‘his’ arms wildly. Unfortunately one of his hands
flies off and damages the University laptop which Ivan was using. The robot
then overheats and is ruined but causes no further damage.
Discuss the contractual liability of Logik arising from the above facts.
General remarks
A popular question and fairly well answered. The question is primarily about implied
terms and exclusion clauses but students are given credit for discussing the
liabilities under the relevant sale of goods legislation before considering the effect of
the two clauses. A logical and structured approach is required.
Law cases, reports and other references the examiners would expect you to use
Students should note at the outset that this is a B2B contract and so Sale of Goods
Act 1979 and UCTA 1977 and not the CRA 2015 will apply. Consider s.14((2) SGA
re satisfactory quality. Consider principles of incorporation (e.g. Interfoto case)
especially whether the second clause is incorporated. Refer to UCTA s.2(2) re
damage to laptop and test of reasonableness under s.11. Consider s.6(2) UCTA re
exclusion of SGA implied term and again s.11 and Schedule 2.
Common errors
Jumping straight into exclusion clauses without considering liability first. Wrongly
using Consumer Rights Act throughout as if it were a B2C contract. Spending too
long on all the incorporation cases rather than focusing on the relevant ones. Not
discussing UCTA and just referring to general ‘reasonableness’. Some wrongly
discussed misrepresentation.
A good answer to this question would…
adopt a very structured approach – what is the potential liability under SGA referring
to the facts. Can Logik escape liability by relying on the exclusion clauses? Taking
each in turn are those clauses incorporated. If so does UCTA apply to prevent them
being used – refer to relevant section and then discuss reasonableness test. Take a
proper reasoned view as to likely outcome.
Poor answers to this question…
were written in a muddled way about whether the clauses were reasonable. Usually
discussed incorporation cases – many not relevant – but did not then go on to apply
UCTA. Failed to identify the actual liability that the clause were seeking to exclude.
Question 6
Hamad is fed up of working as a busy and successful male model. He decides
to open a coffee shop. He has heard that Imogen is interested in selling her
coffee shop located in a trendy part of town. On 1st January Hamad and
Imogen meet to discuss the terms of a sale. Imogen tells Hamad that the
coffee shop is making a profit of £5,000 per month. She produces a set of
accounts which Hamad inspects and which supports her statement. Hamad is
confident that his reputation will enable him to increase profits by 50%.

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 Examiners’ reports 2018

On 1st March Hamad agrees to buy the coffee shop for £500,000 and opens for
business two months later after he has spent £100,000 refurbishing the coffee
shop. Hamad operates the coffee shop for three months but the profits never
exceed £2,000 per month because Starbursts, a national coffee shop chain,
opened a coffee shop a few streets away on 1st February. Imogen met a friend
for a coffee in the new Starbursts on its opening day. Hamad is especially
annoyed as if he had not bought the coffee shop he would have invested the
money in his sister’s internet company which is now making large profits.
Advise Hamad as to whether on the above facts Imogen is liable to him under
the law of misrepresentation.
General remarks
A popular question reasonably well answered. The main fault was to write all about
misrepresentation, quoting cases and principles but failing to apply them to the
particular facts of the question.
Law cases, reports and other references the examiners would expect you to use
Define misrepresentation. Consider statement which was true but subsequently
became untrue: With v O’Flanagan; Aprilia v Spice Girls. Explain the remedy of
rescission and the bars which might prevent it. Insufficient lapse of time here: Leaf,
Salt. Possible inability to restore to previous position because of refurbishment:
Erlanger, Salt. Misrepresentation Act s.2(2). Consider damages – was Imogen
fraudulent: Derry v Peek? Damages for fraud could include lost profits from
alternative business venture: East v Maurer. Measure of damages: Royscott.
Advantages of reverse burden of proof under s.2(1) Misrepresentation Act: Howard
Marine Dredging v Ogden.
Common errors
The question asks for a discussion about misrepresentation, so no need to consider
whether any of the statements are terms or discuss breach of contract. Much time
was wasted on this. Often very little discussion of remedies.
A good answer to this question would…
carefully apply the law to the facts identifying the statements made, the changing
circumstances and the remedies available to Hamad.
Poor answers to this question…
were generic essays about misrepresentation without applying it to the facts and did
not identify the specific types of misrepresentation and the remedies available to
Hamad.
Student extract
It can be confidently argued that the statement by Imogen is an unambiguous
statement. It must be then considered if it is false or not. A statement is false
even when it is misleading, half truth or is rendered false due to change in
circumstances (With v O’Flanagan). Therefore, since due to opening of
Starbursts, the sales have been affected, it can be argued that ‘£5,000 per
month’ was a continued representation, thus becoming false. Opening of a
new shop of coffee changed the circumstances. Next, it must be considered
that whether there was a duty of Imogen to make a statement about new
circumstances since the change occurred in Feb and Hammad and Imogen
contracted in March. The general rule is that there is no duty to disclose fact
(Keates v Earl of Cadogan). However exceptions apply in case of fiduciary
relationship, when there is disclosure of half truth which is misleading and
when circumstances are changed giving rise to a need for making a
statement (Spice Girls v Aprilia). In these circumstances when a new shop
was opened and in knowledge of Imogen (the representor), she must have

7
 informed Hammad about it since it can be argued that Imogen, being an
expert (as was running a business) must have realised the consequences.
Therefore failure to disclose and make a statement is a misrepresentation.
The last requirement of misrepresentation is that induces the party to a
contract (Edgington v Fritz Maurice [sic]). However, there are certain
exceptions to the rule of inducement which includes the knowledge that
statement is untrue (Redgrave V Hurd), not in this scenario as Hammad did
not have an idea. The second is reliance on another inducement (Allwood v
Small), which clearly cannot be seen, he relied on Imogen’s statement. Third
is when representation unknown (Thomas v Horsefield) which is not
applicable here and last is when the person would have contracted anyways
(Atlantic Lives v Baron). Thus none of these exceptions is valid and therefore
it can be argued that Imogen’s statement induced him, on which he relied
and contracted. However, it can also be argued that it was not the sole
inducement as the facts shows that he was confident due to his reputation.
But, the law is that inducement must be substantial but need not be sole.
(Edington v Fitzmaurice).
After establishing that a misrepresentation is made, the type of
misrepresentation must be considered. A misrepresentation may be
fraudulent (Derry v Peek), negligent (Hedley v Heller), innocent or statutory
(Foster v Action Aviation). Fraudulent is when the requirements of Derry v
Peek satisfied. These include knowledge or recklessness of untruth or when
it is likely that the statement may not be true, Burden of proof is on Claimant.
In this scenario, it can be argued that it was fraudulent misrepresentation
because the later circumstances rendered it untrue although not when made,
and Imogen was aware of these circumstances thus requirement of Derry v
Peek are satisfied and it may be a fraudulent one.
It can also be argued that it was negligent misrepresentation, as Imogen was
negligent as to the changed circumstances. For negligent, we must
established that there was a duty and that duty was breached. Burden of
proof on Claimant. This argument is also likely to sustain.
Another type is innocent misrepresentation which is unlikely here as Imogen
was aware of it.
With considering all this, it is more beneficial for Hammad to claim under the
Misrepresentation Act. He can claim under S.2(1) of the Act. The remedies
for misrepresentation includes rescission i.e. putting parties in position had
the contract not have been and damages for this scenario, it is likely that both
damages will be available for rescission it must be noted if there is any bars
for rescission (Clarke v Dickson), transfer to third party (Campbell), time
lapse (Leaf v International Galleries) and the affirmation of contract often
misrepresentation (Long v Lloyd). It can be stated that none is applicable
here therefore there would be rescission possible. Under the Act s.2 (1) –
(Howard Marine v Agden) damages will be extensive, even if it is negligent
misrepresentation damages would be same as that of fraudulent (Royscot v
Rodgerson). Under the common law, Hammad can claim under tort of deceit,
tort of negligent misrepresentation but under the Act, the burden of proof will
shift to Defendant (Imogen), and there is no need to show ‘Hedley v Heller’
relationship.
It can be concluded that Imogen made a misrepresentation which caused
loss to Hammad, who can claim under common law Misrepresentation Act
(more favourable). He will most probably get Rescission and damagers both.

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 Examiners’ reports 2018

Comments on extract
The above is part of a much longer answer which achieved a mid-2:1 mark overall.
Sensible use of case law and a logical structure.
Question 7
(a) Explain what is meant by the term ‘self-induced’ frustration.
(b) Lou Rolls sells and restores antique bathroom fittings. One evening
vandals break in and set fire to his workshop. The workshop and all its
contents are destroyed.
A week before the fire Mel had agreed to pay Lou £5,000 to restore an
antique bath. As agreed, Mel paid Lou £500 when she delivered the bath
with the balance payable on completion. Lou had purchased for £1,000
some specially formulated enamel to use in the restoration. Both the
bath and the enamel were destroyed in the fire.
At the time of the fire Ned, a builder, had almost completed retiling the
floor of Lou’s warehouse. It had been agreed that Lou would pay Ned
£8,000 as soon as the job was completed.
Advise Lou as to his rights and liabilities to Mel and Ned taking account
of the law relating to frustration.
General remarks
This is a question about frustration with part (a) an essay and part (b) a problem.
Answered by a good number of students with part (a) much better answered than
(b). Students who had properly revised this area and read the question carefully
scored well.
Law cases, reports and other references the examiners would expect you to use
(a) Explain briefly the classic definition of frustration, then go on to explain what
is meant by self-induced frustration (an event caused by one of the parties)
with reference to Maritime National Fish v Ocean Trawlers and especially
Super Servant 2.
(b) Explain physical impossibility: Taylor v Caldwell and Davis Contractors v
Fareham UDC. In relation to Mel, consider effect of frustration at common
law: Chandler v Webster. Compare with position under Law Reform
(Frustrated Contracts) Act 1943. Under s.1(2) Mel can get back £500 but Lou
can offset expenses of £1,000, meaning Lou loses £500: refer to Gamerco v
ICM. In relation to Ned – cannot bring an action at common law and no
monies paid in advance so s.1(2) does not help. No benefit conferred on Lou
so s.1(3) doesn’t help either: BP v Hunt.
Common errors
Too many students in part (a) wrote a very wide essay about frustration in general –
the question has a very narrow focus and proper discussion of the two key cases is
essential. In part (b) there was insufficient discussion of remedies and the LR(FC)A.
A good answer to this question would…
give equal weight to parts (a) and (b) spending time on the two key cases in part
(a). For part (b) explain the common law and contrast with the statutory position
giving actual figures as to possible damages, following the instruction to advise Lou
as to his rights and liabilities in relation to Mel and Ned. Needs a clear logical
structure.
Poor answers to this question…
dealt very generically with frustration with lots of irrelevant cases, omitting to
discuss LR(FC)A and often not dealing with Ned at all.

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Question 8
When are damages for non-pecuniary loss recoverable following a breach of
contract? Should this availability be expanded?
General remarks
Not many students attempted this essay question and those who tried did not
answer it well. It is an essay about damages for breach of contract but specifically
related to non-pecuniary loss – a good answer needs to focus on that narrow
aspect of damages with suitable case law in support.
Law cases, reports and other references the examiners would expect you to use
Describe the concept of non-pecuniary loss and then go on to consider each of the
established categories. Provision of pleasure Jarvis v Swan Tours and Farley v
Skinner. Peace of mind Farley v Skinner. Physical inconvenience Miller v Carnival.
Distress Watts v Morrow. Loss of amenity Ruxley.
Common errors
Writing generically about damages without focussing on non-pecuniary losses.
A good answer to this question would…
not only explain the key areas where such losses are recoverable, supported by the
case law above but also respond to the second part of the question as to whether
such categories should be expanded.
Poor answers to this question…
talked generally about damages or wrote very descriptively without any analysis of
the separate elements and little relevant case law.

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 Examiners’ reports 2018

Examiners’ reports 2018

LA1040 Contract law – Zone B

Introduction
The Contract law paper followed the same format as previous years 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.
I always raise the same concern about timing and students would do well to take
note of the need to spend equal time on each of the four questions. Answering only
three questions very often makes achieving even a bare pass extremely difficult.
Even three 2:1 marks (e.g. 62 each) but no fourth question achieves an overall
mark of only 47. Spending excessive time on the first two questions and very little
time on the next two has a similarly dramatic impact on the overall mark. 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.
For problem questions we regularly see a reasonable discussion of the law but very
little attempt to apply it to the specific facts. Another common fault is the lack of
structure when analysing a problem, meaning muddled outcomes or elements of
the problem not addressed in the answer. In particular many students overlook any
‘add on’ question at the end (e.g. ‘would your answer be different if….’), therefore
missing the opportunity for a couple of extra marks.
The instruction at the end of each question should be read very carefully – it may
say who you must advise in a problem question and/or direct you to the particular
area of law to be addressed.
On this paper essay Questions 4 and 6 were particularly badly answered, largely
because students did not read them properly and therefore failed to address the
specific issue raised.

1
Comments on specific questions
Question 1
The Snob Squadron, an exclusive Yacht Club, decide to hold a race and so
place the following advertisement in the January issue of ‘Yachting Monthly’
(the leading sailing magazine):

Dell Buoy Race

The Snob Squadron will hold a yacht race on 1st April at 10am. A prize of
£1,000 has been deposited with Coots, the clubs’ bankers, for the first yacht
to complete the course to the Dell Buoy and back. No formal entry required,
just turn up.

Advise The Snob Squadron of their contractual liability, if any, in the following
alternative circumstances:
(a) The Snob Squadron later decides that the race might attract ‘the wrong
sort of sailors’ and places an advertisement in the February issue of
Practical Boat Owner (a small circulation magazine) cancelling the race.
Alastair does not see the February advertisement and spends £5,000
preparing his boat for the race before he learns of the cancellation from
a friend on 1st March.
(b) Brenda is leading the field and approaching the finish line when Lord
Dim, The Snob Squadron commodore, shouts from the committee boat
that the race has been abandoned.
(c) As (b) except a prize of £200,000 (not £1,000) had been advertised.
(d) Chas saw the boats lining up for the race and followed them. With a
lucky spurt of speed he overtook the leading boat just before the finish
line. Chas was not aware that a prize had been offered.
General remarks
This question was answered by most students. It requires good knowledge of the
law relating to unilateral contracts and was reasonably well done by most, although
not many achieved high 2:1s or above. It required a general discussion of the effect
of the advertisement and then separate discussion of the four scenarios set out at
a) to d), in each case advising Snob Squadron as to whether they were
contractually liable or not.
Law cases, reports and other references the examiners would expect you to use
Discuss the fact that advertisements are usually invitations to treat: Partridge v
Crittenden. Consider the Carlill case and conclude that this is a unilateral contract to
the world at large – with particular reference to the deposit at the bank. Explain
communication of acceptance not required – acceptance is by performance of the
act. Go on to consider:
(a) Withdrawal of offer? Same method to be used: Shuey v US – is it the same?
Communication by a third party can be effective: Dickinson v Dodds.
Expenses recoverable? No – preparatory steps, didn’t complete the race.
(b) Can withdrawal of unilateral offer take place once performance has begun?
Refer to principles in Errington and Dahlia – but don’t overstate the principle
that it can’t – depends on a term being implied to that effect.

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 Examiners’ reports 2018

(c) Refer to Luxor v Cooper – is it necessary to imply a term to that effect when
the consideration is so high?
(d) Can Chas accept an offer of which he is unaware? Discuss R v Clarke,
Gibbons v Proctor.
Common errors
Spending a long time at the outset on general (and irrelevant) points about offer and
acceptance, discussing advertisements and unilateral contracts in general. Not
understanding that Alistair had not started performing the contract, missing the
message from his friend as a means of revocation. Most students missed the
specific point raised in c) re the increase in value of the prize money.
A good answer to this question would…
give a brief introduction of the way on which unilateral contracts operate then focus
on each sub clause. Support every point made with a relevant case (but without
setting out all the facts of each case – it’s the principle that’s important). Reach a
conclusion in each scenario as to whether SS is contractually required to pay out
the reward and why.
Poor answers to this question …
spent too long on a general introduction and failed to apply the legal principles to
the facts. Omitted section c) or completely missed the point and failed to give a
clear opinion in each case whether SS was liable or not.
Student extract
As per the case of Carlill, the company issues an advertisement stating that
they deposited £1,000 in the bank and £100 will be given to the customers
who cannot be cured by the smoke ball of the company. Mrs Carlill was this
customer, but was refused payment, with the excuse that it was merely an
advertisement and thus, not sufficient to bind the company to pay. The courts
held that it was a unilateral contract, a promise for an act. Thus, the company
must pay Mrs Carlill since she conducted the act stipulated.
Applying the same reasoning to the current question, the advertisement is a
unilateral contract. It contains a promise (£1,000) for an act (first yacht to
complete the course to Dell Buoy and back). The terms are very specific as
per Scammell v Ousten and Snob Squadron’s intentions seemed genuine,
since they deposited the £1,000 to Coots. These explanations for a unilateral
offer will apply for any subsequent answers below.
(a) When Snob Squadron decided to revoke, they did so in another
magazine; Practical Boat Owner, which is a small one compared to
Yachting Monthly, a leading sailing magazine. The question now is
whether or not revocation can take place. As per Shuey v US, revocation
must be done in the same way as the offer, or using a more efficient
method. Here, it would seem that Snob Squadron (SS) adopted a lesser
– known magazine, which affects the revocation, rendering it probably
invalid.
There is the issue therefore that based on the advertisement, Alastair
was not informed and did not know of the revocation. Revocation must
be communicated, as per Byrne v Van Tienhoven. There is a factor,
however, that may work in Snob Squadron’s favour. His friend had
informed him of the revocation on 1st March, well before the race.
Considering that he is a reliable third party as per Dickinson v Dodds,
the revocation might be rendered successful.

3
 Another issue arises with the fact that Alastair had spent money
preparing his boat for the race. As it is a unilateral contract, Errington v
Errington would highlight that once acceptance had started, revocation
should not be permissible. Nonetheless, an argument can be use in that
Squad Squadron never mentioned anything about fixing a boat. The act
required is to win the race for the money. Alastair fixing his boat up
seems like his own initiative.
Logically, it would be ridiculous to expect Snob Squadron to be
responsible for every boat owner deciding to fix up their boats for the
race. On this issue, acceptance cannot be said to have begun. A good
starting point would be when Alastair was actually at the yacht race.
Snob Squadron would not be liable to Alastair.
(b) Using Entores v Miles Far East Corporation and denoting the discussion
above, revocation must be communicated. Brenda would have heard (it
would seem) the revocation before she reached the finishing line.
Using the general revocation rule, SS would owe nothing to Brenda. Yet,
this is a unilateral contract. As per above, Errington v Errington would
dictate that revocation should not be possible if acceptance has begun
to take place. In Errington, the couple had started to pay mortgages, as
per the terms of the father in law giving them the house. Though it was
not completed, it has begun.
Above, the writer mentioned how a good starting point of beginning
performance would be at the race itself. Brenda has practically gone
through the entire course and approaching the finish line. As Dahlia v
Four Mill Bank Nominees said, it would no longer be fair to revoke. Not
considering the near completion of the contract. Hence, SS would
probably owe a contractual obligation to Brenda.
(c) One can view the case if Luxor v Cooper here, where the courts
mentioned about revocation of unilateral contracts when a large
consideration is given. Generally, as Professor Corbin would point out,
the act of not allowing revocation when acceptance has commenced is
not a blanket rule and does not need to be applied in every case.
The price of £200,000 seems to be of such a large sum that it would not
be equitable to SS if they were not given all opportunity to revoke. As the
estate agents in Luxor v Cooper did, Brenda took a small risk in return
for a comparatively large sum.
It must be remembered that contract law does not seek to be punitive. It
would be an imbalance in the rights of SS if they were not allowed to
revoke where they place such a big prize return. In this situation, the
revocation may actually be deemed successful. SS would not owe
Brenda the prize.
Comments on extract
This extract is from a longer answer which was awarded a high 2:1 mark It
demonstrates the logical analysis required, appropriate use of relevant case law
and a clear outcome in each scenario.
Question 2
(a) ‘Consideration need not be adequate but it must be sufficient.’
Discuss.

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 Examiners’ reports 2018

(b) Dirk, who is disabled, returns to his car after work to find that someone
has syphoned off the petrol. He informs Eva, a passing police officer,
who says ‘Don't worry, I will get the person who did this’. Dirk replies
‘Thank you, if you do I will pay you £100’. Fiona overhears this
conversation and offers to go and get some petrol for Dirk. Dirk gives
Fiona a can and £10 to pay for the petrol. When Fiona returns Dirk says
‘Thank you for your trouble. I do not have any more money with me but
I want to give you £20 for getting the petrol’.
Eva caught the thief but Dirk now refuses to pay Eva or Fiona anything.
Advise Eva and Fiona.
General remarks
A popular question about consideration which was generally well answered. Split
into two parts, the first being a short essay and the second two problem scenarios.
Marks were lost by either very perfunctory answers to part a) or, conversely, very
long answers to part a) containing much irrelevant material. Less commonly, only
one of the two scenarios in part b) was answered. Too often decent knowledge was
shown but there was a lack of application to the facts.
Law cases, reports and other references the examiners would expect you to use
a. Give the classic definition of consideration and go on to explain the meaning
of the given statement – only certain things will be recognised as
consideration but if they fit that category then there is no further enquiry into
the equivalence of the exchange. Refer to cases such as Thomas v Thomas,
Chappell v Nestle, Ward v Byham, Edmonds v Lawson.
b. Eva – is a pre-existing duty good consideration? Identity public duty: Collins v
Godefroy; Glasbrook v Glamorgan; Leeds United v CC West Yorks.
Fiona – consideration is past: Lampleigh v Braithwaite; Re Casey’s Patents;
Re McArdle.
Common errors
In addition to the timing issues mentioned above, often only focused on one or two
cases in part a) and gave too little detail. Or wrote out all the standard rules about
consideration rather than sticking to the issue about adequacy.
Good answers to this question would…
stick to the issues of adequacy of consideration and illustrate it with three or four
cases explaining how the rule is applied by the courts. And in part b deal with each
issue separately supported by cases and considering whether the legal tests are
met on the facts (e.g. is it within the scope of Eva’s duty or not?). Does Flora fit any
of the exceptions to the past consideration rule?
Poor answers to this question…
contained all the student knew about consideration in part a) or set out the rules
with no case law in support. Got drawn in to long discussion about the modification
cases involving consideration in part b) and missed the point about past
consideration.
Question 3
Farouq meets Gerardo for the first time at a business meeting on 1st April and
agrees to buy Gerardo’s car from him for £10,000. Advise Gerardo as to his
contractual obligations in the following alternative circumstances in the light
of the different mistakes made by the party or parties:
(a) Gerardo was late for the meeting on 1st April and so parked his car in a
hurry and ran to the meeting. This was seen by the police who

5
 suspected it might contain a bomb. The car was destroyed in a
controlled explosion. Gerardo heard a loud bang as he entered the
meeting but thought nothing of it.
(b) Gerardo intended to sell his old jeep but Farouq intended to buy the
sports car he had watched Gerardo park. Gerardo was NOT aware of
Farouq’s mistake.
(c) Gerardo intended to sell his old jeep but Farouq intended to buy the
sports car he had watched Gerardo park. Gerardo was aware of
Farouq’s mistake.
(d) Both Farouq and Gerardo believe Gerardo’s car has a three litre engine.
It actually has a less powerful two litre engine.
General remarks
This question is about mistake – a topic often not understood very well. A few
completely missed the point and discussed frustration. No need for any general
introduction – deal with each scenario separately.
Law cases, reports and other references the examiners would expect you to use
(a) Common/shared mistake as to the existence of the subject matter of the
contract. Discuss Couturier, Bell v Lever, but as the goods once existed Sale
of Goods Act 1979, s.6 will apply.
(b) Cross purposes mistake – consider Smith, Centrovincial, Raffles.
(c) Also cross purposes mistake but one party aware so unilateral mistake
relevant. Consider ‘snapping up’ doctrine and Hartog v Collins, Scriven v
Hindley.
(d) Common mistake as to quality – void at common law, Bell v Lever Bros no
relief in equity following Great Peace.
Common errors
Failing to identify correct type of mistake to fit each example. Thinking the police
had made a ‘mistake’ by blowing up the car! Not advising Gerardo as to his
contractual obligation in each case as required by the question. Making assertions
without supporting case law.
A good answer to this question would…
not only identify the correct type of mistake but go on to say what the consequences
would be (i.e. render the contract void or not). Correctly apply the case law.
Poor answers to this question…
talked vaguely about making a ‘mistake’ without saying what type, gave muddled
answers with half-remembered cases and deployed to the wrong scenarios, gave
chatty answers about what was ‘fair’ without any legal rationale.
Student extract
(d) Mistake generally can only make a contract void if there was a
fundamental difference. In this situation, Farouq and Gerardo both made a
mistake on the engine. It was a common mistake in terms of the quality of
the engine. Mistake as to quality would only render the contract void if it
satisfies the essential difference test in Bell v Lever Brothers.
As per Bell, both the employers and the brokers had the consensus that
the brokers are to leave the company but be substantially remunerated for
it. Afterwards, the company discovered they could simply fire the brokers
without paying anything as they had breached a policy and had been
involved in external business ventures whilst in employment. They sought

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 Examiners’ reports 2018

to reclaim the money, to which the courts declared against with the
reasoning that the mistake was not essentially different enough.
Applying the case to these facts, the one litre difference between the
engines may not be essentially different, as per Lord Atkin and
Thankerton when they applied the test in Bell. Ultimately, Farouq still got a
car, just slower.
Another consideration would be whether or not the courts would allow for
mistake as to quality to render the contract void under equity. Using Solle
v Butcher, the fact the Farouq contracted with Gerardo with the
understanding the engine was supposed to be more powerful, the
argument may work. It would be unfair for Farouq to pay the price but not
get the benefit, as per Grist v Bailey.
Nonetheless, the case of Great Peace Shipping has overruled the entire
notion of equitable mistake. The reasoning and test in Bell v Lever
Brothers therefore applies and the contract would be valid and binding
since the mistake was not sufficiently and essentially different.
Comments on extract
Extract from a much longer answer for which student scored a very high 2:1 and a
first on the paper overall. Shows a very clear logical approach to part (d) using
relevant case law in an intelligent way.
Question 4
Critically evaluate the approach taken by the courts to the implication of
terms into parties’ contracts.
General remarks
This was the worst-answered question on the paper. It was not answered by many
students, but those who attempted it invariably missed the point.
Law cases, reports and other references the examiners would expect you to use
Should distinguish between terms implied by the courts and those implied by statute
– only the former should be discussed. Explain implication in fact – Moorcock
‘business efficacy’ test and Shirlaw ‘officious bystander’ test, and implication in law:
Liverpool CC v Irwin, Johnston v Bloomsbury, Malik v BCCI and Attrill.
Common errors
Most students wrote at length about the difference between warranties and
conditions and innominate terms etc. Those who realised it was about implied terms
focussed on terms implied by statute (e.g. the Sale of Goods Act) not spotting that
the question referred to terms implied ‘by the courts’.
A good answer to this question would…
focus on the narrow remit, set out in detail the tests developed through case law
and comment on their effectiveness given the requirement to ‘critically evaluate’.
Poor answers to this question…
were generic pre-prepared essay about contractual terms that did not identify the
need to discuss solely terms implied by the courts.
Question 5
Ivan Earing is the University of Blue Skye’s dynamic, but naive, Vice
Chancellor who is developing an ‘electronic campus’ to reduce staff costs. He
hears about a new robotic professor being sold by Logik plc. Ivan visits Logik
to see a demonstration of the robot which is called ‘Professor Bright’. Ivan is

7
so impressed he immediately signs a contract to buy one for £200,000 for the
Law School. The contract contains the following provision:
1. Logik plc gives no warranty or assurance that any equipment provided
is of satisfactory quality.
The robot is delivered to the campus where Lurch takes delivery. Lurch signs
a document headed ‘Delivery Note’ which repeats term 1 above but also has
the extra clause below:
2. Logik plc shall not be responsible for any damage to property caused
by their equipment.
Ivan attends the robot’s first lecture in the Law School when ‘Professor
Bright’ appears to get very excited when discussing the doctrine of past
consideration and waves ‘his’ arms wildly. Unfortunately one of his hands
flies off and damages the University laptop which Ivan was using. The robot
then overheats and is ruined but causes no further damage.
Discuss the contractual liability of Logik arising from the above facts.
General remarks
A popular question and fairly well answered. The question is primarily about implied
terms and exclusion clauses but students are given credit for discussing the
liabilities under the relevant sale of goods legislation before considering the effect of
the two clauses. A logical and structured approach is required.
Law cases, reports and other references the examiners would expect you to use
Students should note at the outset that this is a B2B contract and so Sale of Goods
Act 1979 and UCTA 1977 and not the CRA 2015 will apply. Consider s.14(2) SGA
re satisfactory quality. Consider principles of incorporation (e.g. Interfoto case)
especially whether the second clause is incorporated. Refer to UCTA s.2(2) re
damage to laptop and test of reasonableness under s.11. Consider s.6(2) UCTA re
exclusion of SGA implied term and again s.11 and schedule 2.
Common errors
Jumping straight into exclusion clauses without considering liability first. Wrongly
using Consumer Rights Act throughout as if it were a B2C contract. Spending too
long on all the incorporation cases rather than focusing on the relevant ones. Not
discussing UCTA and just referring to general ‘reasonableness’. Some wrongly
discussed misrepresentation.
A good answer to this question would…
adopt a very structured approach – what is the potential liability under SGA referring
to the facts. Can Logik escape liability by relying on the exclusion clauses? Taking
each in turn are those clauses incorporated. If so does UCTA apply to prevent them
being used – refer to relevant section and then discuss reasonableness test. Take a
proper reasoned view as to likely outcome.
Poor answers to this question…
were written in a muddled way about whether the clauses were reasonable. Usually
discussed incorporation cases – many not relevant – but did not then go on to apply
UCTA. Failed to identify the actual liability that the clause were seeking to exclude.
Question 6
‘Where a claimant has a choice of suing either for damages for breach of
contract or for misrepresentation it cannot be said that one remedy is always
preferable to the other.’
Discuss.

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 Examiners’ reports 2018

General remarks
Another badly answered question because students didn’t read the question. Most
wrote a prepared essay about misrepresentation. Firstly the question is about
damages for misrepresentation – not the general principles. Secondly the question
requires a comparison with damages for breach. Very few of those answering this
even mentioned breach, let alone discussed remedies for breach. Not a difficult
question – very descriptive – if read properly.
Law cases, reports and other references the examiners would expect you to use
Begin with a brief description of the key features of both actions. Compare burdens
of proof (e.g. s.2(1) Misrepresentation Act, Howard Marine). Outline the different
measures of damages for breach of contract – expectation: Robinson; reliance
Anglia; restitution: AG v Blake. Outline measures of damage for misrepresentation –
fraudulent, negligent and innocent, Misrepresentation Act s.2(1), Royscott, tortious
measure.
Common errors
Not reading the question and in 90 per cent of cases writing solely about
misrepresentation, no mention of breach and no discussion of measure of
damages.
A good answer to this question would…
explain the concepts of breach and misrepresentation and then go on to explain in
detail with relevant case law the different measures of damages for each. To get the
best marks there then needs to be a clear comparison between the two and the
circumstances where one type of claim may be more favourable than the other.
Poor answers to this question…
just described misrepresentation in great detail with a couple of paragraphs about
remedies at the end and no mention of breach at all.
Question 7
(a) Explain what is meant by the term ‘self-induced’ frustration.
(b) Lou Rolls sells and restores antique bathroom fittings. One evening
vandals break in and set fire to his workshop. The workshop and all its
contents are destroyed.
A week before the fire Mel had agreed to pay Lou £5,000 to restore an
antique bath. As agreed, Mel paid Lou £500 when she delivered the bath
with the balance payable on completion. Lou had purchased for £1,000
some specially formulated enamel to use in the restoration. Both the
bath and the enamel were destroyed in the fire.
At the time of the fire Ned, a builder, had almost completed retiling the
floor of Lou’s warehouse. It had been agreed that Lou would pay Ned
£8,000 as soon as the job was completed.
Advise Lou as to his rights and liabilities to Mel and Ned taking account
of the law relating to frustration.
General remarks
This is a question about frustration with part (a) an essay and part (b) a problem.
Answered by a good number of students with part (a) much better answered than
(b). Student who had properly revised this area and read the question carefully
scored well.
Law cases, reports and other references the examiners would expect you to use
(a) Explain briefly the classic definition of frustration, then go on to explain what
is meant by self-induced frustration (an event caused by one of the parties)

9
 with reference to Maritime National Fish v Ocean Trawlers and especially
Super Servant 2.
(b) Explain physical impossibility: Taylor v Caldwell and Davis Contractors v
Fareham UDC. In relation to Mel consider effect of frustration at common law:
Chandler v Webster. Compare with position under Law Reform (Frustrated
Contracts) Act 1943. Under s.1(2) Mel can get back £500 but Lou can offset
expenses of £1,000, meaning Lou loses £500: refer to Gamerco v ICM. In
relation to Ned – cannot bring an action at common law and no monies paid
in advance so s.1(2) doesn’t help. No benefit conferred on Lou so s.1(3)
doesn’t help either: BP v Hunt.
Common errors
Too many students in part (a) wrote a very wide essay about frustration in general –
the question has a very narrow focus and proper discussion of the two key cases is
essential. In part (b) there was insufficient discussion of remedies and the LR(FC)A.
A good answer to this question would…
give equal weight to parts (a) and (b) spending time on the two key cases in part
(a). For part (b) explain the common law and contrast with the statutory position
giving actual figures as to possible damages, following the instruction to advise Lou
as to his rights and liabilities in relation to Mel and Ned. Needs a clear logical
structure.
Poor answers to this question…
wrote very generically about frustration with lots of irrelevant cases, omitting to
discuss LR(FC)A and often not dealing with Ned at all.
Question 8
‘Specific performance has always been, and should remain, an exceptional
remedy under English law’.
Discuss.
General remarks
Very few students attempted this essay question. Those who did seemed very
unclear about the concept of specific performance and were unable to illustrate their
answer with key cases.
Law cases, reports and other references the examiners would expect you to use
Describe the remedy with reference to Coop v Argyle and explain its regular use in
land cases. Go on to describe the bars to SP which make it exceptional – personal
service, Giles v Morris, where contact supervision required Coop, where damages
are an adequate remedy Bronx Engineering and other bars such as hardship and
mutuality of remedy. Strong answers would note the willingness to award SP when
business otherwise under threat: Sky Petroleum and Thames Valley.
Common errors
Not understanding what SP is and failing to use any case law to support the
arguments
A good answer to this question would…
not only explain the principles with substantial use of case law but would go on to
critically evaluate the principles of SP in answer to the part of the question that says
‘and should remain an exceptional remedy’.
Poor answers to this question…
talked generally about remedies and failed to give any clear explanation of the
nature and purpose of SP.

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 Examiners’ reports 2019

Examiners’ reports 2019

LA1040 Contract law – Zone A

Introduction
The paper contained a good mix of essay and problem questions. The problem
questions generally proved more popular for the majority of students. The principal
cause of low marks was, as in previous years, major timing issues; many of those
scoring bare passes or fails had only answered three rather than four questions.
Even if the questions answered were awarded average marks, it was very difficult to
pass without a fourth question. Candidates should remember that writing pages and
pages for the first question is never going to make up for a missing question, which
will inevitably score zero.
I would reiterate that age old saying to always read the question carefully; the rubric
will often state very specifically the area of contract law involved and avoids much
wasted time discussing irrelevant issues for which no credit will be given. Similarly,
avoid using a pre-prepared essay to answer a question – it will not fit neatly and
sometimes is entirely the wrong topic. However perfectly written the answer, it will
score zero if it does not address the question asked.
The scripts covered a very broad range of abilities and marks.

Comments on specific questions

Question 1
Artem owns a business with 200 employees including Bryony, Charles, Devi
and Eytan. Artem’s bicycle is stolen from the bike shed at his business. On
Monday he sends an email to all his employees:
Please help me look for my stolen bicycle. It is only worth £20 but is of
sentimental value as it belonged to my Dad. I will pay a reward of £200
to anyone who returns the bicycle to me or provides information that
helps me locate it.
On Wednesday he decides to forget about his old bicycle and to buy a new one
at the weekend and so he pins a notice on the bike shed stating that his offer
of a reward for the return of his bicycle is now withdrawn. On Friday afternoon
he also sends an email to all employees stating that the offer of a reward is
withdrawn. Consider the following alternative circumstances:
a) Bryony, an employee, is ill on Monday and Tuesday and does not
come into work. However, she goes for a short walk and sees
Artem’s distinctive bicycle on a rubbish dump. She then returns it to
him on Wednesday morning.
Advise Bryony.

1
 b) Charles is a new employee and is keen to impress his boss. He takes
Tuesday and Wednesday as holiday and searches for the bicycle
which he finds for sale in a second-hand shop. On Thursday he
goes into work and tells Artem where it is.
Advise Charles.
c) Devi learns from Freddie, a colleague, on Thursday about the notice
Freddie has seen on the bike shed withdrawing the reward. That
evening when leaving a pub Devi sees Artem’s bicycle in a hedge
and returns it to him the following morning.
Advise Devi.
d) While walking to work on Tuesday morning Eytan sees the bicycle
outside a shop where the thief has left it. He is riding it to work
when he is overtaken by Artem in his Ferrari who shouts ‘I hope you
are not after the reward, I’ve changed my mind’. Eytan takes the
bicycle to work and gives it to Artem, who refuses to give Eytan any
reward.
Advise Eytan.
General remarks
Almost every candidate chose to answer this question on offer and acceptance and
it was done reasonably well. In terms of structure, an introductory section setting
out the nature of the offer being made – a reward case based on a unilateral offer –
was the most efficient way of answering. Otherwise, candidates tended to launch
straight into the different scenarios in subsections (a)–(d) without covering the offer
at all, or alternatively duplicated information about the offer in their answer to each
subsection, which simply wasted time and did not gain extra credit. This type of
offer and acceptance question always needs a methodical and logical approach
looking at each step in the transaction. There is no need to go through every type of
offer – advert/shop purchase/bilateral, etc. as many candidates did – just identify
the unilateral offer, support with relevant case law then address each scenario to
determine whether the reward would be payable in each case. Some confusion as
to the act required to claim the reward – ‘returns the bicycle or provides information
that helps me locate it’ – relevant as to the point at which performance is complete.
Read the question carefully.
Law cases, reports and other references the examiners would expect you to use
Identify at the start that it’s a unilateral offer referencing the Carlill case.
In (a), the issue is whether B is aware of the offer – if not, she can’t claim (R v
Clarke, Gibbons v Proctor).
In (b), need to consider the effect of the purported withdrawal notice. Not as
effective as email so probably not valid (Shuey).
In (c), there is actual notice of withdrawal via a third party so D cannot claim
(Dickinson v Dodds).
In (d), the issue is whether a unilateral offer can be withdrawn once performance
has commenced – refer to Errington v Errington and Daulia. Consider also whether
such a term is implied when consideration is large (Luxor v Cooper).
Common errors
Misreading the facts. Applying the correct case law to the wrong subsections.
Missing the fact that B was unaware of the offer (perhaps assuming emails were
read at home?). Part (d) was particularly poorly answered with a lack of
understanding of Errington.

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 Examiners’ reports 2019

A good answer to this question would…

often be relatively short but well-structured as outlined above with each assertion
supported by a relevant case or cases. Better students did well on part (d) and were
able to discuss the cases based on implied terms and the fact that E had embarked
on performance.
Poor answers to this question…
were often muddled and spent too long discussing offer and acceptance in general
rather than focusing on reward cases. Showed confusion about how such offers are
accepted and the different methods of withdrawal. The factual scenario was not
read carefully enough or in detail, which led to incorrect answers to some
subsections (which might in fact have been correct answers to different sections).
Question 2
Florence owns five adjoining houses, numbers 1–5 High Street Magictown,
which she intends to rent to local people and students. On 1 September she
advertises the properties as available in the local newspaper but does not
state a price. Advise Florence as to the legal implications of the following
events.
a) Zebedee, a handsome student, contacts Florence who agrees to rent
No 1 High Street to him for £50 per month. Zebedee is amazed at the
low rent and agrees immediately.
b) Dillon is worried that he will not be able to find accommodation
before the university term begins. When he contacts Florence he
agrees to rent No 2 High Street for £1,000 per month even though he
knows this is twice the normal rate.
c) Ermintrude works as Florence’s gardener and was Florence’s
father’s nurse when he was elderly and ill. Florence says that
Ermintrude can live in No 3 High Street without paying any rent
because Ermintrude was so kind to Florence’s father before he died.
d) Florence admires the police force. She agrees to let No 4 High Street
to Brian, a police sergeant. Brian tells her what a tough year he has
had as the police force are understaffed. She tells him she does not
expect any rent as he will be doing such a wonderful job working in
these conditions.
e) Florence agrees to rent No 5 High Street to Brian for £500 per month
but asks Brian to pay the money to her niece Rosalie.
General remarks
This was generally a popular question with the majority of students attempting it. It
is solely about consideration. Although this question doesn’t direct candidates to the
specific topic, a thorough read through at the start should have made that apparent.
Unfortunately, many candidates seeing the word ‘advertise’ in the opening
paragraph launched into long discussions about unilateral offers (exactly the same
information as in Q1), which gained no credit and wasted time. A clearly structured
approach was needed – each subsection covered a different issue. A substantial
number of candidates wasted time by writing a long essay style answer about
consideration but failed to apply the law accurately to the factual scenarios.
Law cases, reports and other references the examiners would expect you to use
a) Adequacy of consideration is not relevant – refer to Chappel v Nestlé, Esso
case and Bainbridge v Firmstone.

3
 b) Same issue as above – overvalue rather than undervalue – still
enforceable.
c) An example of past consideration – which is not good consideration
Lampleigh v Brathwaite, Re McArdle, Re Casey’s Patents. Credit also for
reference to non-pecuniary forms of consideration, e.g. White v Bluett.
d) Pre-existing legal duty is not good consideration– discuss Glasbrook v
Glamorgan and the various ‘football’ policing cases.
e) Consideration can move to a third party Bolton v Madden.
Common errors
Too much time wasted discussing offer and acceptance (irrelevant). Failure to
identify the issue – particularly in (b) and (e). All subsections involved consideration
on formation; many candidates got involved in long discussions about Williams v
Roffey and practical benefit, etc., which is only relevant to modification of an
existing contract. Many failed to spot that it was past consideration in (c). And long
discussion about privity and third-party rights were irrelevant to (e), which was quite
a short and simple point.
A good answer to this question would…
separate out the subsections, give a short analysis of the issue raised in each, set
out the principle clearly, e.g. ‘the law does not query the adequacy of consideration’,
‘past consideration is not good consideration’, etc. and support the answer with two
or three relevant cases in each section.
Poor answers to this question…
wasted time talking about offer and acceptance, wrote a rambling essay about
consideration generally, often correctly stating legal principles and cases but wholly
failing to apply it to the factual scenarios.
Question 3
Fern has her own garden waste clearance business, JunkBunk. During
exceptionally busy periods, she often gets her friend, Rose, to assist her with
the heavy lifting. Fern is contacted by Mary, the director of a construction
company who is about to start work on nearby land and needs the site
cleared of garden waste immediately. Fern emails Mary a price list. At the
bottom of the page in large capital letters the list states, ‘FOR OUR TERMS
AND CONDITIONS PLEASE REFER TO OUR WEBSITE’. Mary tries to access
JunkBunk’s webpages but Fern is doing some maintenance on the site and
the relevant pages will not be available until later that afternoon. Mary is in a
hurry and telephones Fern and secures the services of JunkBunk.
Fern and Rose start work at Mary’s site the following week. However, at the
end of the first day’s labour, Fern damages her back lifting a load that was too
heavy and needs to take a month off work. Rose undertakes the work alone
but is not able to complete the work by the contractual deadline. Mary’s
construction project is delayed, triggering serious financial consequences for
her company. In addition, Rose carelessly spills some toxic waste on the site,
forcing Mary to pay £3,000 for special environmental cleaning. Mary is furious
but then notices the following clauses in JunkBunk’s terms and conditions:
1.1 Liability for damage by employees of JunkBunk, whatsoever and
howsoever caused, is limited to £100.
1.2 JunkBunk is not liable for any delay, even if caused by their own
actions.
Advise Mary.

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 Examiners’ reports 2019

General remarks
This was not a very popular question. Those who did answer it did so reasonably
well provided that they correctly identified it as B2B contract, therefore involving
UCTA rather than the CRA 2015. The question requires a discussion of the
enforceability of limitation and exclusion clauses and how this impacts on Mary’s
ability to claim against JB for the cleaning and the missed deadline. This first
requires a discussion of whether the clauses have been incorporated into the
contract by notice and the accessibility of the website. Then consideration of
whether the clause covers this factual situation (good candidates noted that Rose
was not an employee). The second half of the answer should cover statutory control
via UCTA and reasonableness tests.
Law cases, reports and other references the examiners would expect you to use
The standard incorporation cases should be referenced and applied: Thornton v
Shoe Lane Parking, Olley v Marlborough Hotel, Curtis Chemical, etc. Mary’s claim
will be under supply of Goods and Services Act.
Then identify that Mary is not a consumer so UCTA applies. Refer specifically to
s.2(2) re damage to property and s.11 and Schedule 2 for the reasonableness test.
Use case law that interprets these provisions, e.g. Mitchell v Finney Lock. Compare
courts’ attitude to limitation compared with exclusion clauses (Canada Steamship).
Common errors
Treating Mary as a consumer and wrongly applying CRA instead of UCTA.
Spending too long on incorporation and barely discussing the statutory regime. Not
applying the law to the facts. Remember UCTA merely acts to permit or not permit
exclusion clauses – it is not the statute under which the claim is brought.
A good answer to this question would…
spend roughly equal time on the incorporation/applicability points and the statutory
regime. Carefully apply the law to the specific factual scenario. Separate out each
issue and potential claim form the very busy scenario.
Poor answers to this question…
muddled up all the characters (a problem throughout the paper) making arguments
difficult to follow. Failed to discuss the statutory regime at all or applied the wrong
Act. When correctly identifying UCTA then writing only about ‘reasonableness’
without reference to the correct sections.
Question 4
a) In what circumstances will the right to rescind a contract for
misrepresentation be lost?
b) Hitem places the following advertisement on a website offering cars
for sale:
‘Stunning 2015 Mini Cooper for sale only £10,000.’
In fact the car is a 2010 model with some rust and is only worth
£2,000. A 2015 Mini Cooper is worth £12,000.
Advise Hitem as to his potential liability to pay damages for
misrepresentation.
General remarks
This question was attempted by the majority of candidates. It was actually a very
straightforward misrepresentation question, with clear instructions in both parts of
the question as to exactly what was required. Unfortunately, those instructions were
largely ignored and very many answers simply became a rambling essay packed
full of cases and legislation, demonstrating plenty of knowledge but very little

5
application to the questions asked. Very much a ‘write all you know about
misrepresentation’ rather than a genuine attempt to address the issues raised.
Therefore, marks were often disappointing. Part (a) required a discussion of the four
bars to rescission with a supporting case for each (see extract below). The short
factual scenario in part (b) asked for advice about ‘damages’ – often there was no
discussion at all about damages.
Law cases, reports and other references the examiners would expect you to use
In part (a): inability to make restitution (Erlanger), lapse of time (Leaf), affirmation
(Peyman v Lanjani) and intervention of third party rights (Ingram v Little).

In part (b): need for untrue statement of fact, discuss mere puff (Dimmock v Hallett).
Discuss fraud (Derry v Peek), measure of damages (East v Maurer), explain s .2(1)
Misrepresentation Act (Royscott v Rogerson), burden of proof (Howard Maine
Dredging).
Common errors
Not answering the question. Often plenty of material in part (a) that would have
been relevant in part (b) but no mention of bars to rescission. Too much discussion
of how to prove misrepresentation, which belonged in part (b). No mention in part
(b) of damages. Knowledge of remedies in misrepresentation was overall very poor.
Many wasted time writing about possible breach of contract when the question
clearly asks about damages for misrepresentation.
A good answer to this question would…
apply knowledge of misrepresentation to the two specific questions using relevant
case law and show good knowledge of remedies and the difference between s.2(1)
and fraudulent misrepresentation.
Poor answers to this question…
contained the errors set out above. Wasted time on breach of contract. Gave an
unstructured and rambling account or alternatively a pre-prepared essay about all
aspects of misrepresentation without focusing on the two distinct questions.
Student extract
a) Misrepresentation is an unambiguous false statement of fact in law
which induces the other party to enter into the contract. (Dimmock v
Hallet). When misrepresentation is proved then the misrepresented
party has a right to rescind the contract under common law and
Misrepresentation Act 1987. Rescission means putting both parties
into their pre-contractual state where any goods or money
exchanged are returned. However there are four bars to rescission
and if any of these bars operate then the right to rescind has been
lost. I will discuss these bars in turn.
I) Where the misrepresented party is aware of the
misrepresentation but still continues with the contract thus
affirming it, the right to rescind is lost (Long v Lloyd). In this case
the misrepresented party was aware of the misrepresentation but
still continued with the contract so the court held that right to
rescission was lost. Then in the case of Peyman v Lanjani a dual-
test was formed which basically stated that if both parties were
aware of the misrepresentation then logically the right to
rescission must be lost.
II) Where there is a significant lapse of time between the contract
formed and the discovery of misrepresentation, the authority on
this proposition is Leaf v International Galleries, in this case there

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 Examiners’ reports 2019

was a misrepresentation regarding a painting and a wrong

painting had been perceived by the claimant who thought he was
buying the painting to be one thing but it turned out to be another
painting. Right of rescission was lost because there was a time
lapse of about five years. Though right to rescission can be lost
even when there is a much lesser time lapse.
III) Where the rights of innocent third parties are involved the right to
rescission will be lost. This means where the misrepresentor
acquired a good product through his misrepresentation and then
passed it on and sold it to an innocent third party, then under the
law of misrepresentation, the innocent third party will not be asked
to return the product to the first owner from whom the
misrepresentor acquired that product. This is why in such a
situation claimant will be advised to claim under the law for
mistake because in that scenario remedy will not be available
under misrepresentation because of the rights of the third party
involved.
IV) Where restitution is impossible because the property or goods
have been consumed, used or inextricably mixed, the right to
rescission will be lost. The authority in this proposition in Clark v
Dickinson. Restitution was not available in the above mentioned
case but nonetheless it was established if there was a possibility
to mitigate or compensate the effects of misrepresentation by
giving the money then this can be used.

Restitution means putting the parties in a position in which they were before
the contract. There were the bars to rescission which if operative do not allow
the right to rescind the contract.
Comments on extract
This excellent answer with an equally good section (b) scored a high first. It is a
clear answer to the question asked, explains each of the four bars and includes
relevant supporting case law.
Question 5
‘English contract law defines the type of event which amounts to a frustrating
event far too narrowly. The courts should be more ready to relieve a party
from their contractual obligations following events which make the contract
more onerous to perform.’
Discuss.
General remarks
This was a reasonably popular question about frustration and most candidates who
attempted it obtained a mid-range mark. Again, plenty of knowledge of the
principles of frustration and relevant case law was shown but to score more highly
that knowledge needed to be applied to the specific question. There needed to be
some critical analysis of how narrow the English doctrine is in reality and the impact
on legal certainty if the doctrine were to be relaxed. Some candidates made a
reasonable attempt at this by discussing how frustration should not enable parties
to simply escape from a ‘bad bargain’, nor permit parties to benefit unjustly. Also,
discussing the cases on ‘self-induced’ frustration. The commercial use of force
majeure clauses to mitigate against the common law was also a discussion that
gained credit for better candidates.

7
Law cases, reports and other references the examiners would expect you to use
Davies v Fareham, Jackson v Union Marine, Super Servant II, Ocean Trawler, force
majeure clauses.
Common errors
Writing a generic pre-prepared essay about all aspects of frustration, including
going through every section of the Frustrated Contracts Act, which had no real
relevance. Missing the point of the quote in the question and failing to take a view
about the positives and negatives of a narrow doctrine.
A good answer to this question would…
briefly explain the doctrine of frustration giving case law examples of how it
operates and why the courts have applied it on a narrow basis using relevant
examples – see extract below.
Poor answers to this question…
failed to address the question and simply wrote a generic essay about frustration,
often containing relevant cases but failed to comment or draw any conclusion to
support the thesis in the question.
Student extract
The law of frustration is where the contract cannot be performed in the
prescribed manner due to some form of illegality or impossibility which
renders performance fundamentally and significantly different from what was
initially intended.
The doctrine of frustration usually operates on very narrow terms. There are
primarily two reasons for this. The first is that the doctrine of frustration does
not wish to protect a particular party simply when he has made a bad
bargain. This was explained in the decision of Davis Contractors v Fareham,
where the claimant could not claim for money under the doctrine of frustration
as the extra money to complete the job was due to the lack of availability of
the skilled labour. This turned out to be a bad bargain and the courts did not
wish to allow them an escape route.
The second reason for the narrowness of the doctrine is because the future is
uncertain and there could be a sudden increase or decrease in prices due to
inflation. The court in such situations does not wish to impose frustration as
then a very wide range of cases would be frustrated. So, clauses such as the
force majeure clause are important in such contracts as they wish to prepare
or predict about the situations in the future which could not frustrate the
contract. Other types of clauses include the hardship and intervener clauses.
The advantage of such clauses is that they help prepare the parties for future
events, provides with a greater degree of certainty and is a wider concept.
So these are the reasons why frustration is such a narrow concept. But, there
are certain situations where the courts have been willing to use the doctrine.
The first situation is where there has been an impossibility of the performance
of the contract. In such situations, the courts have held that a contract will be
frustrated. Such an incident occurred in Taylor v Coldwell where the contract
was held to be frustrated when the hall where the concert was to take place
was destroyed by fire. The claimants in this case could not sue for the
advertising costs and for the defendant’s failure to provide the hall.
Where possibility of performance is only temporarily impaired, the contract
could still be frustrated as was the case in Jackson v Union of Marine where
only temporary unavailability of the ship meant that the contract was
frustrated.

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On the other hand, the courts would also be willing to apply the doctrine of
frustration where there is a frustration of purpose. Such cases are rare but
they are held to have frustrated the contract. One of the cases on this issue
was that of Krell v Henry where it was held that the contract had been
frustrated when the coronation of Edward VII was cancelled and thus, the
defendant was not bound to pay for the rooms as the purpose of this contract
was no more there. But, this case can be contrasted with that of Herne Bay
Steam Boat v Hutton, where the cancellation of the naval review was not held
to have frustrated the contract. The difference the courts found between Krell
and Hutton was in Krell, the foundation of the contract was on the basis of the
coronation whereas in Hutton, the naval review was not the sole reason for
the contract.
Where an express provision has been stated that intervening acts will not
affect a contract, the courts have however, been reluctant to use the doctrine
of frustration. However, in Water Development Boards case, the doctrine of
frustration did apply as the intervening act was held to be substantial even
though there had been a provision made in the contract. But the intervening
event was held to be a substantial cause why the contract could not be
carried on with and thus, it was held to have frustrated the contract.
The courts have also been reluctant to use the doctrine of frustration in case
of self-induced frustration. This is where the defendant imposes the
frustration upon himself and in such a case the courts have held that the
contract would not be frustrated. The first case occurred in the Ocean
Trawlers case where the argument of the defendant that the contract was
frustrated was rejected as their failure to obtain licences was held to be self-
induced.
Another case of Super Servant II was of more significance to the issue of
self-induced frustration. In this case, transportation of goods by a more
expensive way was held to be self-induced as the owners had failed to
provide transportation with Super Servant I when Super Servant II sank as it
was being used in other contracts. However, there was a force majeure
clause in the agreement where such a situation was held to be foreseen. So,
the owners of the Super Servant II could get the money. However had there
not been a force majeure clause, the claim would have failed. This seemed to
be unfair to the ship owners but this is what the courts held. It shows the
importance of force majeure clauses.
So, to conclude, it can be seen that the doctrine of frustration has been
narrowly defined and used, but the courts have still been willing to use it in
circumstances where certain events have made the contract too onerous to
perform. However there are still certain limitations to this doctrine of
frustration or not as can be seen in the cases of self-induced frustration
objectively foreseen, the courts have been reluctant to set aside contracts
due to frustration.
Comments on extract
This scored a high 2:1 mark. It recognises the thesis in the question and makes a
good attempt to apply the relevant cases to that issue. It identifies where the courts
have and have not permitted frustration to apply but could have been improved by
perhaps more discussion of the risks of commercial uncertainty if frustration was
applied more readily.

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Question 6
‘The law in relation to contracts that involve illegal acts or are contrary to
public policy is difficult to state clearly and rests upon many fine and difficult
distinctions. The decision of the Supreme Court in Patel v Mirza (2016) did
little to clarify the law in this area.’
Discuss.
General remarks
This question was the least answered question on the paper, attempted by only a
handful of students. It was perhaps recognised (sensibly) that it would be difficult to
answer without a good understanding of the facts and implications of the Patel
case. It is fairly standard question focusing on two particular aspects of illegality.
The question required a description and critique of the current law, preferably
identifying those concepts that are difficult to define, e.g. contracts contrary to good
morals or the fine distinction between contracts illegal as formed and those illegal
as performed. Followed by a thorough discussion of the Patel case.
Law cases, reports and other references the examiners would expect you to use
See above.
Common errors
Too little case law and little/no knowledge of Patel.
A good answer to this question would…
show a good understanding of the law to date and the often subtle distinctions
being drawn in the cases. When discussing Patel, an in-depth knowledge of the
decision and in particular the differences of approach taken by the Justices.
Poor answers to this question…
did not mention Patel!
Question 7
‘The introduction of the category of innominate terms was unnecessary and
has introduced undesirable uncertainty into the law of contract.’
Discuss.
General remarks
Answered by relatively low numbers of candidates but generally answered well.
This is a standard essay question requiring a description of the nature and
operation of conditions and warranties and how and why the innominate term came
about. It should include a discussion about the benefit of certainty promoted by the
condition/warranty classification and the flexibility and retrospective justice that can
be achieved by introducing innominate terms. Better answers would note that
certainty may be more important in B2B contracts than in B2C contracts.
Law cases, reports and other references the examiners would expect you to use
Hong Kong Fir.
Common errors
Either a discursive ‘philosophical’ essay with little legal content and no case law; or
simply reciting the key facts about the three types of terms with no commentary or
attempt to address the question. Some completely missed the point – despite the
issue being clearly signposted in the question – and wrote a pre-prepared essay
about either damages for breach of contract or frustration (which would have
earned valuable marks if responding to other questions on the paper).

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A good answer to this question would…

be carefully structured, first identifying and explaining the different types of
contractual terms. Then explain the impact of the Hong Kong Fir case and, in strong
cases, perhaps refer to the earlier origins of innominate terms.
Poor answers to this question…
lacked detail or missed the point, showing the common errors mentioned above.
Question 8
Kipper is in the process of setting up his new online flower delivery business,
Blooms, and contracts with Jake to design and build his website. He makes it
clear to Jake that the website must be ready to launch on 1 February so that it
will be ready for St Valentine’s Day on 14 February. He anticipates
exceptionally good sales revenue on that day as well as the chance to start
building a loyal client base in time for the spring season. Jake assures Kipper
that the website will be ready on time. A clause in their contract stipulates
that Jake must pay a ‘penalty’ of £5,000 should the website not be ready in
time, as well as £500 for each subsequent day of delay. Unfortunately, Jake
catches flu and is unable to finish the website until 5 February. Kipper
demands that Jake pay him £6,500. He estimates that the delay has cost him
£3,000 in lost revenue. Not only that, the delay causes Kipper severe anxiety
and distress.
When Kipper finally launches the Bloom’s website on 5 February, he receives
an order from a very wealthy client, Mrs X, wanting deliveries of flowers for
each of her offices across London on a weekly basis. Kipper is thrilled with
such a lucrative deal. Further, Mrs X is so impressed by the exceptional
choice of Blooms’ flowers that she rings Kipper suggesting that she invest
money in the business to expand it. In designing the website, however, Jake
has made a mistake which means that the delivery addresses cannot be
inputted correctly. All of Mrs X’s flowers are delivered to the wrong address.
Mrs X is furious and cancels all future orders. Furthermore, she decides not
to invest in his business.
Advise Kipper what damages, if any, he is entitled to.
General remarks
This question was answered badly by the relatively low number of candidates who
attempted it. It requires careful reading and breaking down into several elements to
ensure a reasonable mark. It is about damages for breach of a B2B contract. The
final line of the question specifically requires advice about damages. Any answer
that omits a discussion about contractual damages is not going to pass. Many
answers missed the point by discussing only contractual terms (which would have
better answered Q7). Several spotting the word ‘mistake’ wrote a pre-prepared
essay about mistake, perhaps frustrated by the lack of any question about mistake
on the paper. This can only score zero. Those that did discuss remedies and the
different measures of damages/foreseeability, etc. did reasonably well. Most were
unable to discuss the penalty clause issue.
Law cases, reports and other references the examiners would expect you to use
Penalty clause (Cavendish).
Common errors
Completely missing the point and not mentioning damages. Confusing the various
parties. Failing to identify the two key breaches by J (missing the deadline and error
in creating the addresses). Thinking that flu provides a defence (or even suggesting
it frustrates the contract!). Not discussing the current law on penalty clauses. Failing
to understand how losses are measured and not considering foreseeability issues.

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A good answer to this question would…
identify this as B2B contract. Recognise that the deadline is strict liability and
therefore the excuse is irrelevant. Discuss whether £5,000 payment is a penalty
clause by reference to the principles in Cavendish. K unlikely to recover for non-
pecuniary loss. Identify the mistake with the website as a breach and discuss the
foreseeability and loss flowing directly from that (the cancellation of Mrs X’s order),
showing good understanding of contractual damages. Recognise foreseeability is a
problem with Mrs X’s proposed investment.
Poor answers to this question…
missed the point or had insufficient knowledge of the principles governing
foreseeability and the contractual measure of damages and resorted to discussions
of what was ‘fair’ without any legal basis or case law.

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Examiners’ reports 2019

LA1040 Contract law – Zone B

Introduction
The paper contained a good mix of essay and problem questions. The problem
questions generally proved more popular for the majority of students. The principal
cause of low marks was, as in previous years, major timing issues; many of those
scoring bare passes or fails had only answered three rather than four questions.
Even if the questions answered were awarded average marks, it was very difficult to
pass without a fourth question. Candidates should remember that writing pages and
pages for the first question is never going to make up for a missing question, which
will inevitably score zero.
I would reiterate that age old saying to always read the question carefully; the rubric
will often state very specifically the area of contract law involved and avoids much
wasted time discussing irrelevant issues for which no credit will be given. Similarly,
avoid using a pre-prepared essay to answer a question – it will not fit neatly and
sometimes is entirely the wrong topic. However perfectly written the answer, it will
score zero if it does not address the question asked.
There was a tendency, even in problem questions, to write a long essay covering all
aspects of that area of law but then spending very little time on the important matter
of applying that law to the factual scenario. Shorter and more focused answers
showing a clear understanding of the principles will always score more highly.
The scripts covered a very broad range of abilities and marks.

Comments on specific questions

Question 1
Gunter decides to sell some of his books. He takes the following actions:
a) He writes to Severine offering her his first edition of Anson on
contract for £100. Severine replies to Gunter by letter accepting the
offer but the letter is never delivered.
b) He writes to Ewan offering him a signed copy of his, Gunter’s, own
first contract book for £200. Ewan posts a letter accepting the offer
but forgets to put a stamp on it and the letter is not delivered as a
result.
c) He writes to Mindy offering her a second edition of Chitty on contract
for £300 and tells her that he ‘...will need notice of her acceptance’
saying that ‘being a contract lawyer like him, she will understand

1
 why’. Mindy posts a letter accepting the offer but it is never
delivered.
d) He telephones Patrick to offer him his third edition of Pollock on
contract for £400. Patrick says that he will think about it and get
back to Gunter. The following day Patrick telephones Gunter and
leaves a message on his voicemail to say he will buy the Pollock on
contract for £350 and that he will assume that the book is his at that
price unless Gunter replies otherwise and that he will collect the
book when he sees Gunter at the Contract Teachers’ Conference
next month. Gunter listens to the message and puts the book aside
to take to the conference.
Gunter attends the conference where he meets Severine, Mindy, Ewan and
Patrick. Gunter tells Severine, Ewan and Mindy that he was surprised when he
did not receive any replies to his offers to them and so he sold the books he
offered to a bookseller. He also tells Patrick that only last week he changed
his mind about selling the third edition of Pollock.
Advise Severine, Ewan, Mindy and Patrick if they have any contractual claims
against Gunter.
General remarks
This was an offer and acceptance question answered by the vast majority of
candidates and mostly done reasonably well. The fact that it was divided into four
mini problems, linked but each raising a different point, made it easier to gain marks
and created a clear structure. The first three related to the postal rule, which is
generally well known but there were subtle differences to each. It was important to
support each point of principle with a relevant case. Answers need not be very long
provided they covered the key points – the better answers were short and clear.
With a problem question on offer and acceptance it is not necessary to start with a
long preamble about all the different types of offers, etc. – just address the factual
scenario in the question.
Law cases, reports and other references the examiners would expect you to use
a) Define the offer. Postal rule applies: Adams v Lindsell and Henthorne v
Fraser. Acceptance effective on posting: Household Fire v Grant.
b) Postal rule as before but only applies where letter is properly addressed:
Korbetis v Transgrain.
c) Here postal rule inapplicable because the offeror particularly asked for
notice of acceptance: Holwell Securities v Hughes.
d) G made an offer and P a counter-offer (Hyde v Wrench). Communicated
when deemed reasonable to listen to the message (Brimnes). Actual
communication too here. Can P rely on G’s silence? (Felthouse v Bindley
and Rust v Abbey Life.)
Common errors
The point in (c) about the requirement for actual notice was missed by many – who
therefore just repeated their answer to (a). Indeed, quite a few gave the same basic
answer to (a), (b) and (c). In (d), most were able to discuss counter-offer and the
relevant case but very many failed to spot the issue about acceptance by silence.
A good answer to this question would…
identify the subtle distinctions in the operation of the postal rule and give succinct
answers with a key case to support each point. There were two main points in (d),
which the best answers spotted and discussed.

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 Examiners’ reports 2019

Poor answers to this question…

gave a long preamble about offer and acceptance, often showing knowledge of the
important cases needed to answer the question but then failed to apply the law to
the factual scenarios. Gave very repetitive answers to the first three sections,
without noticing the varying facts.
Question 2
e) ‘Past consideration is never good consideration.’
Discuss.
f) The roof of Amelia’s house was damaged in a winter storm. She
contracted with Bertie who told her it was about a week’s work and
would cost £10,000. Amelia accepted Bertie’s price and they further
agreed that the work would be completed before 1 May so that
Amelia could host a 21st birthday party at her house on 3 May for
her daughter Camilla.
Bertie began the work on 1 April but bad weather caused many
delays. As a result Bertie said he would only be able to complete the
job by 1 May if he employed extra workmen and this would increase
his costs. Amelia offered to pay him £12,000 if he completed the job
on time. Bertie went on to complete the repairs before 1 May and
Amelia paid him £10,000 but refuses to pay any more.
Advise Bertie.
General remarks
This was a question about consideration requiring a short essay response to part
(a) and a problem question in part (b). It was answered by most candidates and
very good marks were achieved by some. For those who did less well, many spent
disproportionate time on one section or the other (or sometimes failed to answer
one part at all). Part (a) required a simple description of the principles of past
consideration and supporting case law. It was directed solely to that point but many
wasted time on a generic essay about all aspects of consideration (some of which
was relevant to part (b) but then did not appear there). Part (b) was about
modification of an existing contract and whether there was consideration for the
promise to pay more. Many wasted time writing out the facts of part (b) when the
key promise needed to be identified and the rules of consideration applied to it.
Law cases, reports and other references the examiners would expect you to use
a) Define rule by reference to Roscorla v Thomas and Eastwood v Kenyon.
Refer to the exception in Lampleigh v Braithwaite and the development of
that in Pao On and Re Casey’s Patents.
b) Poor weather is not sufficient for frustration (Davis v Fareham). Does B
provide consideration for A’s promise? Discuss rules in Stilk v Myrick,
Williams v Roffey. Discuss practical benefit (MWB v Rock). Consider duress
(Davis) – probably not as not demanded.
Common errors
Not focusing solely on past consideration in part (a) but producing a pre-prepared
essay on all the rules of consideration. Discussing only frustration in part (b).
Missing the fact that this was about modification rather than creation of a new
contract. Omitting the key case of Williams v Roffey, which was the premise of part
(b).
A good answer to this question would…
focus on the key issues with supporting case as per the extract below. References
to MWB and discussion of duress scored extra marks.

3
Poor answers to this question…
were poorly structured, writing too much in (a) and too little in (b). Gave rambling
descriptive answers to (b) rather than analysing the facts and applying the relevant
cases.
Student extract
Following Currie v Misa, a valuable consideration consists of rights, interest,
profit and benefit accruing to one party while loss, responsibility, forbearance
and detriment suffered or undertaken by another party.
Past consideration is not good consideration since that the party does the
work before the consideration is given, it is not likely that the performance
was done in return for the consideration.
In Roscorla v Thomas, the defendant gave promise of warranty as to the
soundness of the horse after the sale of the horse. The consideration was
past so that the promise was not enforceable.
In Re McArdle, the wife had the work done before her husband’s promise
was given. Therefore, the consideration was past and the promise was not
enforceable.
However, there is an exception so that past consideration can be good
consideration also. In this exception, there are three elements to be satisfied,
following Pao On v Lau Yiu Tong.
First the performance done by the promisee must be at the request of the
promisor. In Lampleigh v Braithwaite, the act was done at the promisor’s
request and later due to the good performance done the promisor promised
to give consideration, the promise may be enforceable.
The second element is that both parties must understand that if it is always
rewarded for the act done, such as business condition. In Re Casey’s Patent,
if is always clearly paid for the plaintiff’s service.
The last element is that the promise must be legally enforceable.
From the discussion above, past consideration is not ‘never good
consideration’, as it may fall within these exceptions.
Comments on extract
This was a relatively short answer with some lack of clarity/poor English. But it was
well structured, set out the principle first then the exceptions and contained all the
relevant cases. Part (b) was equally short but accurate and it scored a high 2:1
overall.
Question 3
‘In deciding whether an agreement is said to evidence an intention to create
legal relations the court often refers to so-called presumptions. However this
approach can be difficult to apply in borderline cases.’
Discuss.
General remarks
This essay question was not answered by many candidates but it was actually fairly
straightforward. It required a description of the two presumptions – that, in domestic
and social arrangements, there is a presumption that there is no intention to create
legal relations and, in commercial transactions, there is a presumption that there is.
In each case, these presumptions are rebuttable and the question required a

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 Examiners’ reports 2019

discussion of the relevant case law. Better answers were able to address the
borderline cases where the presumptions are arguably not very helpful.
Law cases, reports and other references the examiners would expect you to use
Social transactions: Balfour v Balfour, Merritt v Merritt, Jones v Padavatti,
Radmacher v Granatino.
Commercial transactions: Esso v Commrs Customs & Excise, Frank v JR Compton.
Borderline: Blue v Ashley, Preston v Methodist Conference.
Common errors
Too discursive with insufficient case law. Too much description of the facts of the
cases without making clear the principles deriving from them. Too little detail.
A good answer to this question would…
(see extract below).
Poor answers to this question…
showed the errors set out above – too wordy and lacking in case law.
Student extract
On deciding whether an agreement is said to evidence an intention to create
legal relation the court often return to so called presumptions. However this
approach can be difficult to apply in borderline cases.’
For a contract to be enforceable under the law, parties must intend to create
a legal relation with the other party. They must be entering into an agreement
which can be enforced in court. Not each and every agreement is
enforceable under the law. These can be found in many agreements which
are not under legal consequence. As it seems simple, it is rather a critical
issue to be decided. The court will not presume that there was an intention
between the parties to have a legal consequence of their agreement.
The court will determine the issue objectively. Court will not ask to know
about the state of mind of the parties whether they had intention to make
legal relation, rather court will seek that whether reasonable party in such a
situation, possesses an intention to create legal relation. Edmond v Lawson.
On the cases of social or domestic agreements court will presume that there
is no intention to create legal relation between them. However, this
presumption can be rebutted by adducing contrary intention between parties.
In the case of Belfour v Belfour a husband, while working abroad, promised
to pay £30 per month to his wife. When he did not provide, the court held that
wife is not entitled that money as she did not give any consideration for that.
Moreover, there was not any intention to create legal relation between them.
Lord Atkin was concerned about policy rather the intention of the parties. He
said ‘courts of this country have to multiply one hundred fold if their
agreement is held to be under legal obligation’.
In the case of Merritt v Merritt: a husband promised to pay his wife £40 per
month by which she covers her outstanding mortgage payments. He signed a
note that he will transfer the house to her if she fulfils all payments. It was
held that there was intention between them to create legal relations because
he signed a note which is enforceable under law.
In the case of Soulsbury v Soulsbury the court stated that there was intention
to create legal relation between the spouses.

5
 In the case of Padavatton a mother promised her daughter to stay in her
house if she came to England and complete her bar course. During her
course the mother wanted her house back. After a claim it was held that it
was a domestic agreement and thus there was no intention of legal relation.
In the case of Drake v Strout a couples agreement of child maintenance
following breakdown of a relationship was held that there was ITCLR.
There are some factors by which the presumption that domestic agreement
does not have ITCLR is rebuttable.
1. Business context: when family members enter into a contract on a
basis of business content, there might be an intention to create legal
relation. Snelling v Snelling.
2. Certainty: when it is found that contract is certain, then presumption
will be rebutted.
3. Reliance: when other party act to their detriment by relying on
promise, there might be intention between them. Parker v Clarke.
In the agreement of commercial basis the court will presume that there is
intention to create legal relation exists. Esso petroleum. However this
presumption can also be rebutted by contrary evidence. Rose, Kleinwort
Benson v Malaysia Corporation.
Again where the terms of the contract can be found unclear and vague there
might be assumed that lack of intention of legal consequence. Vaughan v
Vaughan.
It is not always easy for the court to determine a particular agreement
whether it has a nature of being enforceable. English court often apply those
presumptions to avoid complexity in determining the actual nature of an
agreement. After all that discussion one thing appears to be clear that for
agreement to be binding by court, it is of essence that intention of the parties
must be to have a legal inference of their agreement.
Comments on extract
Shows good knowledge of many relevant cases and a clear structure. A little more
analysis/contrast and some discussion of borderline cases would have helped. It
scored a mid-2:1.
Question 4
Loki visits his local tropical fish shop, Aquatix, in order to restock his
aquarium. He chooses a selection of fish and goes to the cash desk to pay.
There is a notice at the cash desk that says, ‘customers can request a copy of
Aquatix’s terms and conditions from the cashier’. Loki is not wearing his
reading glasses and does not clearly see what is written on the notice. Before
paying for the fish, Roach, the sales assistant offers him a monthly Aquatix
subscription whereby if he pays £30 per month for one calendar year, each
month he can choose two fish as well as a monthly stock of aquarium
cleaning products and fish food. He agrees and pays the first month’s
subscription.
Loki takes his new fish home. Five days later all the fish in his tank have died,
including his expensive Angel fish that he has had for several years. He
realises that Roach has accidentally put the wrong chemicals in the water
with the new fish. Furious, he returns to Aquatix, to demand £500 in
compensation to replace all the fish in his tank. He also refuses to continue

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 Examiners’ reports 2019

with the subscription service. Roach hands him a copy of Aquatix’s terms
and conditions which state:
(i) Liability for damage by employees of Aquatix, whatsoever and
howsoever caused, is limited to £10.
(ii) The minimum subscription length is for 12 months. Subscribers
wishing to cancel before this period will need to pay a sum of £300.
Advise Loki.
General remarks
This was a fairly popular question about limitation and exclusion clauses in a B2C
contract. There is a great deal of information in the question and identifying the key
issues and answering in a structured way was the biggest challenge. The two
questions are: can L claim for the dead fish; and does he need to pay the £300
cancellation fee? The first question is whether the two clauses are incorporated into
the contract, using relevant case law about notice given to L at the time. Then
consider whether clauses cover the alleged breaches. Note that L is a consumer so
relevant legislation is Consumer Rights Act not UCTA.
Law cases, reports and other references the examiners would expect you to use
The standard incorporation cases should be referenced and applied: Thornton v
Shoe Lane Parking, Olley v Marlborough Hotel, Curtis Chemical, etc. L’s claim is
under Sale of Goods Act.
Then identify that Loki is a consumer so CRA 2015 applies. Refer specifically to
s.62 and the unfairness test. Plus Schedule 2 for the indicative list of terms that are
unfair. Compare courts’ attitude to limitation compared with exclusion clauses
(Canada Steamship).
Common errors
Not identifying L as a consumer so using the B2B legislation in error. Discussing
incorporation at length with every possible case and saying very little about the
statutory regime.
A good answer to this question would…
reference only the relevant incorporation cases, consider L’s two potential
complaints, analyse whether the clauses apply, discuss the CRA regime for
consumers. Structure is everything in these questions.
Poor answers to this question…
did the opposite of that and had a rambling essay with the errors set out above.
Question 5
Sanjit wishes to buy a sports car and visits Marcella, a car dealer. Sanjit
immediately falls in love with a vehicle known as a Land Patrol, which
Marcella describes as ‘the most reliable car on the road’. He asks Marcella
about the age of the vehicle. Marcella consults the Land Patrol’s
documentation and sees that it is written in Italian. Marcella’s Italian language
skills are very basic but he has an attempt at deciphering the information and
eventually informs Sanjit that the car is ‘brand new’. Sanjit glances at the
registration plate of the vehicle and notices that the registration would
suggest that the vehicle is older than Marcella has claimed. Sanjit suspects,
but is not certain, that Marcella has given him incorrect information about the
age of the car.
Sanjit decides to buy the car. Over the course of a few weeks, various defects
appear in the car which cost Sanjit £1,000 to repair. Finally, one morning the
car will not start and Sanjit has to spend £500 in taxi fares that week to

7
commute to his work place. He then finds out that the car is not brand new
but eight years old.
Advise Marcella as to her potential liability to pay damages for
misrepresentation.
General remarks
A traditional problem question on misrepresentation answered by large numbers of
candidates and mostly reasonably well. It needs a logical and structured approach,
starting with a definition of misrepresentation then working through the facts
identifying the key elements and applying relevant case law at each point. The
rubric is very specific – discuss damages for misrepresentation – many candidates
wasted time taking about the possibility of a breach of contract. Candidates need to
identify the two statements made ‘most reliable car on the road’ (probably mere
puff) and ‘brand new’ (probably misrepresentation). Consider whether S was
induced by this statement to enter the contract or whether his suspicions counteract
that. Go on to consider the types of misrepresentation and the remedies available.
Generally, candidates were less good in looking at the remedies.
Law cases, reports and other references the examiners would expect you to use
Give standard definition of misrepresentation. Distinguish mere puff (Dimmock v
Hallett). Is Marcella an expert (Smith v Land and Properties)? Is there reliance by
Sanjit (Museprime v Adhill)? Doesn’t have to be the only inducement (Edgington v
Fitzmaurice, Hayward v Zurich). Opportunity to verify (Atwood v Small). Discuss
fraud (Derry v Peek), measure of damages (East v Maurer), explain s.2(1)
Misrepresentation Act, Royscott v Rogerson, burden of proof Howard Maine
Dredging. Discuss tortious measure of damages.
Common errors
Not addressing the facts and writing ‘all you know’ about misrepresentation essay.
Not spotting the inducement point and whether Sanjit’s suspicions made a
difference. Writing about the possibility of a claim for breach of contract, ignoring
the rubric that refers to misrepresentation.
A good answer to this question would…
be clearly structured identifying the possible misrepresentation statements,
exploring whether it induced the contract then taking time to discuss the types of
misrepresentation and the remedies flowing from it with supporting case law.
Poor answers to this question…
wrote a generic essay on misrepresentation with no application to the facts.
Student extract
Misrepresentation is a false statement of fact or law. A statement of opinion is
not a representation. (Bissett v Wilkinson). The statements that must be
evaluated here are, when she said ‘the most reliable car on the road’, and
when she said the car was ‘brand new’.
Let’s first check whether they are false statement of fact or not. ‘Best car on
the road’ sounds like a ‘mere puff’, which is a statement of opinion (Dimmock
v Halett). But if the person who’s making the statement can be regarded as
someone who should know the facts that are true, in this case Marcella is a
car dealer, a[n] opinion like that can become a statement of fact (Smith v
Land and Properties Ltd). I would argue this was a statement of fact. And the
statement ‘brand new’ also a statement of fact.
Reliance
For statements to be actionable, it must be relied upon and made material.
Made material basically means, any reasonable person would be induced by

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 Examiners’ reports 2019

such statements (Museprime Properties v Adhill Properties). It can’t be

actionable if representee wasn’t aware of the representation (Horsefall v
Thomas), and did not rely upon the misrepresentation. It doesn’t have to be
the only inducement (Edgington v Fitzmaurice). Here it is reasonable to
expect, a reasonable person would be induced by these statements. Sanjit
was already in love with this car, before Marcella made those statements. But
he did ask the age of the vehicle. Where Marcella wrongly replied ‘brand
new’. It could have been an important deciding factor for him if he knew it
wasn’t new. So, it can be argued he relied upon that statement. As we
mentioned before no need for it to be the only inducement (Edgington v
Fitzmaurice). When she glanced over the resignation, and couldn’t read the
manual, she should have informed Sanjit, as half-truth (Nottingham Brick and
Tile Co v Butler) and change of circumstances can be regarded as
misrepresentation. (With v O’Flanagan). So, I think it’s sufficiently clear, that
Sanjit relied on the statement. So, now the question is what type of
misrepresentation might be brought against Marcella.
Comments on extract
A good structure with a defined section on reliance/inducement and good
supporting cases. Candidate then went on to discuss types of misrepresentation
and remedies in a bit less detail and scored a mid-2:1.
Question 6
Suggs visits Marlow in response to an advertisement placed by Marlow about
the sale of his grand piano for £15,000. Suggs is posing as Felix, a well-
known YouTube star; the resemblance is remarkable. Suggs offers Marlow
£10,000 for the piano. Despite the reduced price, Marlow wishes to accept the
offer because he thinks that it would be exciting to sell to such a star. Suggs
presents a cheque for £10,000. He has stolen this from Felix and fraudulently
signed it in Felix’s name. In an attempt to falsely prove his identity to Marlow,
Suggs shows him a short YouTube video on his smartphone featuring Felix.
Marlow accepts Suggs’ offer and allows Suggs to take the piano away in his
van. Suggs immediately takes the piano to Arias, a dealer, and sells it to
them. A few days later, Marlow is contacted by his bank and informed that the
cheque is worthless.
Depressed by this news, Marlow goes out to cheer himself up. He sees a sign
in the window of his favourite music shop offering for sale a guitar that was
owned by Brian Carferry, a famous singer and songwriter. The price is
advertised at £30. Marlow rushes in and buys the guitar, arranging for it to be
delivered to him the next day. However, the shop later refuses to deliver the
guitar, telling Marlow that their new sales assistant mistakenly put the wrong
price tag on the guitar.
Advise Marlow.
General remarks
This question about mistake was not very popular with candidates. Those who did
answer it did reasonably well in the first scenario between Marlow and Suggs but
the second scenario regarding the guitar was badly answered. The first scenario
involves a discussion of mistake as to identity in a face-to-face scenario referring to
the standard cases in this area. The presumption is that mistake is not one of
identity and he intended to contract with the person in front of him. Discussion is
needed about how that may be rebutted by the extensive checks undertaken and
the close resemblance. No need to discuss the cases where the parties are not
present as they do not apply to this factual scenario. Then go on to consider the
impact of an innocent third party buying the piano. The second scenario involves a

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discussion of ‘snapping up’ with relevant case law – a point missed by most
candidates. If Marlow could reasonably have supposed that the shop had made a
mistake then that prevents a contract being formed.
Law cases, reports and other references the examiners would expect you to use
Cases on mistaken identity face to face – Lewis v Avery, Cundy v Lindsay, Ingram v
Little, Shogun Finance.
Snapping up/unilateral mistake – Hartog v Colin and Shields.
Common errors
Writing a generic essay on all types of mistake with no application to the facts.
A good answer to this question would…
be well structured, setting out the leading cases on mistaken identity in a face-to-
face setting, pointing out that, unless void for mistake, then the third party will
acquire good title. Explain how snapping up case law is likely to prevent M taking
advantage of an obvious mistake by the shop.
Poor answers to this question…
wrote a generic and unfocused essay on all types of mistake with no application to
the facts.
Question 7
‘There should be no legal restrictions on the right of an innocent party to
affirm a contract when faced with an anticipatory repudiatory breach.’
Discuss.
General remarks
Very few candidates answered this essay question on anticipatory breach. It
required a description of the law and a detailed analysis/criticism of the leading and
controversial case of White v Carter was essential. The question requires particular
focus on the right of the innocent party to affirm the contract rather than immediately
seeking a remedy from the other party and the restrictions on this right – i.e. where
the innocent party is dependent on cooperation from the party in breach or where
there is no legitimate interest in performance of the contract. Good answers would
go on to think about the policy and legal implications of having no restrictions on the
right of the innocent party.
Law cases, reports and other references the examiners would expect you to use
White v Carter.
Common errors
Writing generally about breach of contract rather than focussing on anticipatory
breach. Lack of reference to or analysis of White v Carter.
A good answer to this question would…
set out the nature and effect of anticipatory breach and the options open to the
innocent party. Critical and detailed analysis of White v Carter. Take a view on
policy issues.
Poor answers to this question…
wrote generically about breach of contract with insufficient knowledge of
anticipatory breach.

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 Examiners’ reports 2019

Question 8
By reference to relevant case law discuss THREE of the following
propositions:
a) ‘Specific Performance is not available where it would require the
constant supervision of the court’;
b) ‘Damages based upon the so called ‘cost of cure’ are rarely awarded
in actions for breach of contract’;
c) ‘Disappointment damages for breach of contract are awarded when
the provision of pleasure is an important, but not necessarily the only,
object of the contract’;
d) ‘A penalty is a term of a contract that imposes an obligation to pay a
sum of money on the party in breach which is not proportionate to any
legitimate interest of the innocent party’;
e) ‘Damages for breach of contract are only rarely assessed by reference
to the gain of the party in breach.’
General remarks
This multi-part question focussed on damages for breach of contract. Rather than a
single essay the subsections each address a very specific principle derived from
case law. Surprisingly, it was not attempted by large numbers of candidates. There
was a choice – only three sections out of five were required – so candidates could
focus on those areas where they had most knowledge. Marks were relatively easy
to achieve if the cases were known – each point of principle had a specific case in
mind – see below.
Law cases, reports and other references the examiners would expect you to use
a) Co-op v Argyll.
b) Ruxley v Forsyth.
c) Farley v Skinner.
d) Makdessi.
e) A-G v Blake.
Common errors
Answering fewer than three subsections or answering all five, in which case, the
best three answers were counted for the overall mark. Failing to identify the key
cases.
A good answer to this question would…
show good knowledge of contractual damages, focused on the specific principle in
each subsection, illustrate with the key case and ‘discuss’ the effect as required by
the rubric to the question. Reference to the policy implications of these key cases
would increase the mark.
Poor answers to this question…
missed the point and provided a discursive answer without reference to case law.

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