Summary of Contract and Statute

Contract law in modern times comes from both common law and statute. Common law is
created by judges through court decisions, while statutes are laws made by Parliament.

A statute goes through three stages:

1. House of Commons – The primary law-making body with elected Members of

Parliament (MPs). The process of making a statute begins here.
2. House of Lords – The second chamber that reviews and revises proposed laws. Some
members are elected, while others are appointed by the monarch on the Prime
Minister’s advice. It cannot stop a law but can delay it.
3. Monarchy – The King or Queen must give Royal Assent before a law becomes
official. However, the monarch always follows government advice and does not read
the full statute. The last time a monarch rejected a law was in 1715.

Key Terms for Laws Made by Parliament:

• Statute – A law made by Parliament (also called statutory law).

• Act of Parliament – Another term for a statute.
• Legislation – The collective term for all statutes.

Exercise 1 – Matching Words to Definitions

a) The main law-making body in England. → Parliament

b) Members of Parliament. → MPs
c) A law made in Parliament. → Statute / Act of Parliament
d) Chosen by the people to be a political representative. → Elected
e) A word meaning all of the laws made by Parliament. → Legislation
f) A system of choosing new Members of Parliament. All of the people have a vote. →
Election

Exercise 2 – True or False Statements

a) A statute is the same thing as an Act of Parliament. → True

b) A statute always starts in the House of Lords. → False (It starts in the House of
Commons.)
c) Members of the House of Commons are elected, but some members of the House of
Lords are not. → True
d) The King or Queen often stops a new statute if they disagree with it. → False (They
always accept government advice.)
e) Legislation is another word for a single statute. → False (Legislation refers to all
statutes collectively.)
Summary of the Document

This document explains key terms related to statutes and contract law, particularly focusing
on the Unfair Contract Terms Act 1977 (UCTA). It also covers verbs vs. nouns,
definitions of legal terms, and the different meanings of "term" and "terms" in contract law.

1. Statutes are laws made by Parliament that regulate various legal areas, including
contract law.
2. UCTA 1977 controls the extent to which businesses can limit their liability in
contracts.
3. Important legal words, such as "transaction," "restriction," "liability," and "terms,"
are defined to help with contract law understanding.
4. The word "terms" has multiple meanings, including the contents of a contract and
specific legal expressions.
5. The word "term" can refer to a single provision in a contract or its duration.

Exercise 3 – Identifying Verbs and Nouns

• Act – Noun
• Deals – Verb
• Covers – Verb
• Places – Verb
• Restr ictions – Noun
• Terms – Noun
• Agree – Verb
• Part – Noun
• Ways – Noun
• Selling – Verb
• Limit – Verb
• Liability – Noun
• Negligence – Noun

Exercise 4 – Completing the Definitions

a) A transaction is a piece of business, such as buying or selling something.

b) To cover something is to deal with, or include something.

c) A restriction is a limit that is put on something.

d) If you have liability for something, it means that you have legal responsibility for it.

e) The terms of a contract are its contents. It means the conditions and duties that you agree
to perform when you enter into the contract.
f) To place a restriction upon someone is to put limits upon what they are allowed to do.

Exercise 5 – Choosing the Correct "Term" or "Terms"

a) Some of the terms used in this letter are very old-fashioned, and lawyers don’t really use
them anymore. (terms 2 – words and expressions)

b) For the entire term of this contract, the Employee shall not disclose any confidential
information to any third party. (term 2 – duration of the contract)

c) There is usually a term in most commercial contracts dealing with the jurisdiction of the
contract in case of disputes. (term 1 – a single duty or condition)

d) When you sign a contract, you agree to all of the terms that it contains. (terms 1 – all of
the duties and conditions in a contract)

Summary of Contract Law

In contract law, businesses generally have the freedom to create agreements as long as they
comply with case law and Acts of Parliament such as the Unfair Contract Terms Act.
However, if a contract goes against the law, a judge may declare it void, meaning it is not
enforceable in court.

For a contract to be valid:

1. Both parties must have the capacity to contract, meaning they must be:
o Old enough to give consent
o Mentally sound
o Sober and not under the influence of drugs
2. A contract must be entered into voluntarily, without duress (pressure).
3. Contracts can be:
o Written
o Oral (spoken)
o A deed (contract under seal) – which can be valid even without
consideration (something of value exchanged). For example, a donation can
be legally binding if signed as a deed.
4. A contract is discharged when it ends. If one party fails to meet their obligations, this
is called a breach. The injured party (claimant) can sue the party in breach
(defendant).

Exercise 1 – True or False

a) Acts of Parliament concerning contract law are to protect the public and do not affect
businesses at all.
False (Business contracts must also comply with the law.)
b) If a contract is void, it will not be enforceable by a court.
True

c) If I sign a contract after drinking a whole bottle of wine and three beers, the contract
might not be valid.
True (A person must have the capacity to contract, meaning they must not be intoxicated.)

d) In very special circumstances, it is possible to have a contract where one of the parties
does not provide consideration.
True (A deed or contract under seal can be valid without consideration.)

e) The injured party and the party in breach are the same person.
False (The injured party is the one harmed, while the party in breach is the one who failed to
meet their contractual obligations.)

Exercise 2 – Completing the Sentences

a) You are only 16 years old, so you do not have capacity to contract.

b) A contract that is valid even though one of the parties has not provided consideration
usually takes the form of a contract under seal.

c) We made an oral contract, and even though it involves a very large sum of money, it does
not need to be in writing to be valid.

d) There are various ways in which a contract can be discharged, including performance of
all duties or breach.

e) If a contract is binding, then it is enforceable by a court.

f) You did not fulfil your obligations under this contract, and as the injured party, I have the
right to sue you for breach.

g) Did you sign the contract voluntarily, or was it signed under duress?

h) One of the terms of this contract is not valid contrary to the Sale of Goods Act, and the
term is therefore void.

i) If I promise to make a donation to a person or an organisation, it is a legally binding

contract if the agreement takes the form of a deed.

j) Any private agreement must comply with all relevant law, including Acts of Parliament.

Summary of the Dispute and Court Case

John Oliver, the owner of Oliver’s Auto, sold a second-hand car to Susan Hicks for £1000,
which she paid for by cheque. The car broke down twice in the first week, and Susan was
unhappy. She asked John Oliver for a replacement car, but he refused. In response, Susan
cancelled her cheque, meaning John Oliver received no payment.

Susan later told John Oliver he could collect the broken car, but he refused. Instead, he
decided to sue Susan for breach of contract for failing to pay. He filed a claim at
Chatsworth County Court for £1000 plus a £60 court fee, totaling £1060.

Exercise 1 – True or False

a) John Oliver owns a taxi business in Chatsworth.

False (He owns a car dealership that sells second-hand cars, many from a taxi company.)

b) Susan Hicks did not pay in cash for the car she bought from John Oliver.
True (She paid by cheque but later cancelled it.)

c) Susan Hicks telephoned John Oliver to ask him for a different car.
True

d) John Oliver collected the car from Susan’s house last week.
False (Susan offered, but John refused to collect it.)

e) John Oliver is not claiming any interest on the £1000 he says Susan owes to him.
True (He is only claiming £1000 for the car and £60 for the court fee, no extra interest.)

Exercise 2 – Matching Questions with Answers

a) What is a claimant? → (4) The person who starts the legal action.

b) What is a defendant? → (5) The person who the claimant is making a claim against.

c) What does sue mean? → (1) To start an action against someone in the civil court.

d) What does defective mean? → (6) Faulty—not working correctly.

e) What is direct loss? → (2) A loss suffered as a direct result of the breach of contract.

f) What is consequential loss? → (3) A loss suffered as an indirect result of the breach of
contract.

Exercise 3 – Completing the Sentences

a) I must return the goods that you delivered to my shop yesterday as they are all defective,
and I cannot sell things that do not work properly.

b) Mr. Wilkes breached the contract because he delivered the goods two weeks late. As an
immediate result of this, I suffered a direct loss of £2000 because I could not sell the goods to
the buyer who was waiting for them.

c) You must pay what you owe me at once, or I will sue you in the County Court.

d) When the claim form was served upon the defendant, he decided to pay the money that he
owed to the claimant.

e) The loss that you suffered as a breach of the contract was not a direct result of the breach.
A court will say that this is consequential loss.

f) Several people owe money to my business, and as a result, I am the claimant in three
different cases in the County Court.

Verbs (Infinitive)

• Deals -> To deal

• Covers -> To cover
• Places -> To place
• Agree -> To agree
• Selling -> To sell
• Limit -> To limit

Nouns (Synonyms)

• Act -> Deed, Action, Law

• Restrictions -> Limitations, Constraints, Boundaries
• Terms -> Conditions, Provisions, Clauses
• Part -> Portion, Segment, Section
• Ways -> Methods, Means, Approaches
• Liability -> Responsibility, Obligation, Accountability
• Negligence -> Carelessness, Neglect, Oversight