CONTRACT LAW

Introduction to Offer and Acceptance

The doctrine of offer and acceptance lies at the heart of contract formation in English law.
For a binding agreement to arise, there must be a clear offer made by one party and an unqualified acceptance of that
offer by the other. This model ensures certainty and predictability, providing an objective test for when a legally
enforceable agreement exists.
Case-law has shaped detailed rules on how to recognise an offer, identify acceptance, and resolve disputes about their
timing and content.

Offer
An offer is a clear, definite, and unequivocal expression of willingness to be bound on certain terms as soon as it is
accepted by the offeree.
An offer must:
 Show serious intention to create legal relations.
 Be sufficiently certain in its terms.
 Create a power of acceptance in the offeree.
Example: In Carlill v Carbolic Smoke Ball Co (1893), the company's advertisement with a bank deposit
demonstrated intention to be bound upon performance.

Objective and Subjective Test

Courts apply an objective test to determine whether a statement amounts to an offer.
 The question is whether a reasonable person would interpret the statement as showing an intention to be
bound.
 The subjective intention of the parties is irrelevant.
Smith v Hughes (1871): It is the outward expression that matters, not undisclosed intentions.

Distinguishing Between an Offer and an Invitation to Treat

It is essential to distinguish offers from invitations to treat, which are invitations to negotiate or invite offers from
others.
Key principle:
 An invitation to treat lacks intention to be bound immediately upon acceptance.
 Protects sellers from unintended obligations to unlimited buyers.

Identifying an Invitation to Treat

Common examples include:
 Goods on shop shelves: Invitation to treat.
o Case: Pharmaceutical Society v Boots (1953) – customer makes the offer at the till.
 Shop window displays:
o Case: Fisher v Bell (1961) – display with price tag is not an offer.
 Advertisements:
o Case: Partridge v Crittenden (1968) – general advertisements are invitations to treat.
 Auctions with reserve: Treated as invitations to treat.

Identifying an Offer
A true offer must:
 Be clear and definite in its terms.
 Indicate willingness to be bound upon acceptance.
 Contain sufficiently certain terms (e.g. price, subject matter).
Unilateral offers can be made to the world at large.
Case: Carlill v Carbolic Smoke Ball Co – reward advertisement was a binding offer.

Bilateral Offers and Unilateral Offers

Bilateral Contracts:
 Both parties exchange promises.
  Binding at the moment of mutual promise.
 Typical in sales, service contracts.
Unilateral Contracts:
 One party promises to pay upon the performance of a specific act.
 Acceptance occurs through complete performance.
 Carlill v Carbolic Smoke Ball Co is the classic example of a unilateral offer.

An Offer Must Be Communicated to Be Effective

An offer is only effective once communicated to the offeree.
 The offeree cannot accept an offer of which they are unaware.
Case Example: R v Clarke (1927) – no valid acceptance without knowledge of the offer.

Acceptance
Acceptance is a final and unqualified assent to all the terms of the offer.
 Must mirror the offer exactly (mirror image rule).
 Once communicated, forms a binding contract.
 Acceptance must be clear and unequivocal.

Counter-offers and Requests for Flexibility in Payment Terms

Counter-offers:
 Reject the original offer and propose new terms.
 Terminate the original offer.
 Case: Hyde v Wrench (1840) – counter-offer destroyed original offer.
Request for Information:
 Does not terminate the offer.
 Merely seeks clarification.
 Case: Stevenson v McLean (1880) – kept original offer alive.

The Battle of the Forms

Occurs when businesses exchange standard terms with conflicting provisions.
 Typically resolved by the “last shot rule” – the last terms sent and accepted govern the contract.
 Courts examine conduct and communications to identify acceptance.
Case: Butler Machine Tool v Ex-Cell-O (1979).

The Offeree’s Acceptance Must Be in Respect of Offer

Acceptance must respond to the actual offer made.
 Cannot be acceptance of something the offeree was unaware of.
 Silence generally cannot amount to acceptance.
Case: Felthouse v Bindley (1862) – silence is not acceptance.

Forms of Acceptance for Bilateral Offers

Acceptance may be:
 Oral, written, or by conduct.
 Must be communicated to the offeror.
 Silence generally does not constitute acceptance (unless agreed otherwise).
 Offeror may prescribe specific mode of acceptance.

The Postal Acceptance Rule

 Acceptance is effective when posted, not when received.
 Applies where post is a reasonable means of communication.
 Prevents revocation once acceptance is posted.
Case: Adams v Lindsell (1818) – contract formed upon posting.
  Revocation must reach offeree before they post acceptance.

Forms of Acceptance for Unilateral Offers

 Acceptance occurs by performing the requested act.
 No need to notify the offeror in advance.
 Offeror cannot revoke once offeree has begun performance.
Case: Carlill v Carbolic Smoke Ball Co (1893) – performance itself was acceptance.
Case: Errington v Errington (1952) – revocation not permitted once performance had begun.

The Termination of an Offer

An offer may terminate through:
 Revocation (before acceptance).
 Rejection by the offeree.
 Counter-offer (terminates original offer).
 Lapse of time (stated or reasonable period).
 Failure of condition precedent.
 Death of offeror or offeree (in certain contexts).

The Offeror Can Revoke the Offer

 The offeror may withdraw the offer at any time before acceptance.
 Revocation must be effectively communicated to the offeree.
Case: Payne v Cave (1789) – withdrawal before acceptance effective.

Revocation Must Be Communicated

 Revocation is only effective upon receipt by the offeree.
 Merely sending is insufficient.
Case: Byrne v Van Tienhoven (1880) – revocation ineffective if acceptance already posted.
Revocation can be communicated by a reliable third party.
Case: Dickinson v Dodds (1876).

The Revocation of Unilateral Offers

 Generally revocable before acceptance.
 BUT: Cannot be revoked once offeree has begun performance.
 Offeror must allow offeree a reasonable opportunity to complete performance.
Case: Errington v Errington (1952) – revocation barred once performance started.
Carlill v Carbolic Smoke Ball Co – performance constituted acceptance.

Counter-offers
 Reject the original offer and propose alternative terms.
 Original offer cannot then be accepted unless revived.
 Case: Hyde v Wrench (1840).

Lapse of Time
 Offers may expire after a stated time or after a reasonable time.
 What is "reasonable" depends on subject matter and circumstances.
 Courts will assess based on the nature of goods, market conditions.

New Offer
 A new proposal after rejection or counter-offer is treated as a new offer.
 The original offer cannot simply be revived without fresh acceptance.
 Negotiation cycle effectively restarts.
EXAM TIP (SQE1-style):
Always test contract formation systematically:
 Is there a valid offer?
 Was there acceptance (mirror image, properly communicated)?
 Any counter-offers or requests for information?
 Correct method of acceptance (postal rule, unilateral performance)?
 Was revocation valid and effective?
 Any termination of the offer?

Introduction to Consideration
Consideration is a core requirement for the formation of a simple (non-deed) contract in English law.
It is traditionally defined as something of value exchanged between the parties. Consideration is the price for which
the promise of the other is bought.
Key Principle: Without consideration, a simple contract is not enforceable.
Case: Currie v Misa (1875) – defines consideration as a benefit to the promisor or a detriment to the promisee.
Consideration serves to demonstrate mutuality and serious intention in contractual dealings.

Consideration Must Be Sufficient, Not Adequate

Rule: The law requires that consideration be sufficient (i.e., recognised in law as having value), but it need not be
adequate (i.e., equivalent in economic value to the promise).
 Courts will not inquire into the fairness of the bargain.
 Even something nominal or trivial can suffice.
Case: Thomas v Thomas (1842) – £1 per year rent deemed sufficient consideration.
Case: Chappell & Co v Nestlé (1960) – chocolate wrappers were valid consideration.
Exam Point: The court only requires that consideration has some legal value – adequacy is for the parties to decide.

Consideration Must Not Be Past

General Rule: Past consideration is no consideration.
 An act done before the promise is made cannot normally count as consideration for that promise.
 The promise must be made in exchange for the consideration, not after it has been performed.
Case: Re McArdle (1951) – work already done on house; promise to pay made after work completed was
unenforceable.

The Past Consideration Rule Does Not Apply When the Previous Request Device Applies
Exception to Past Consideration Rule: The previous request doctrine.
Principle: Where one party requests the other to perform a service and later promises to pay for it, the law may imply
a promise to pay at the time of the request.
 The act is treated as performed at the promisor’s request, with an implied understanding of payment.
 The subsequent express promise merely confirms the existing obligation.
Case: Lampleigh v Braithwaite (1615) – defendant requested pardon-seeking efforts; later promise to pay upheld.
Case: Re Casey’s Patents (1892) – past services at request treated as valid consideration for later promise.
Exam Note: Always check if the service was requested before it was performed – that triggers the exception.

The Performance of a Duty Imposed by Law

General Rule: Performing a public duty imposed by law is not good consideration.
 Doing what you are already legally bound to do confers no new legal benefit.
Case: Collins v Godefroy (1831) – attending court under subpoena was not good consideration for extra payment.
Exception: Exceeding the legal duty can be consideration.
Case: Glasbrook Bros v Glamorgan CC (1925) – police providing extra protection above normal duty.

The Performance of an Existing Contractual Duty Owed to a Third Party

 Rule: Performance of an existing contractual duty owed to a third party can amount to valid consideration for a new
promise.
 Because the promisor gains a benefit by securing the third party’s performance.
Case: Shadwell v Shadwell (1860) – nephew’s existing engagement was good consideration for uncle’s promise.

The Performance of an Existing Contractual Duty as General Rule

General Rule: Performing a duty you already owe under an existing contract is not valid consideration for a new
promise by the same party.
 No new benefit is conferred.
Case: Stilk v Myrick (1809) – sailors’ promise to complete voyage despite desertions was part of existing duty; extra
payment unenforceable.
Exception: Where there is new consideration or variation with additional elements.

A Promise to Pay More for the Performance of an Existing Contractual Duty Owed to the Promisor
Traditional Rule: Such promises require new consideration to be binding.
 Simply doing what you already promised is not enough.
 Stilk v Myrick applies.
Modern Development: Practical benefit may suffice.
Case: Williams v Roffey Bros (1990) – promise to pay more was enforceable because promisor obtained a practical
benefit (avoiding penalties, ensuring timely completion).

An Amendment to a Contract in Which a Promisor Promises Additional Money for Something Additional
Principle: If the promisee undertakes additional obligations beyond the original contract, this can be valid
consideration for more payment.
 The new promise is supported by fresh consideration.
 Courts will look for real change in obligations.
Example: Delivering goods to a different location, working extra hours.
Exam Point: Variation must involve something beyond the original duty.

A Promise to Pay More Under an Existing Contract and Practical Benefit

Modern Rule: A promise to pay more can be enforceable if the promisor obtains a practical benefit and there is no
duress or fraud.
Case: Williams v Roffey Bros (1990) – contractor promised extra payment to subcontractor to finish work on time;
benefit of avoiding penalty clauses.
Key Test:
 Did the promisor gain a practical benefit?
 Was there genuine agreement without economic duress?

A Promise to Pay Less Under an Existing Contract

General Rule: Part-payment of a debt does not satisfy the whole debt.
 Creditor can sue for the balance.
 Foakes v Beer (1884) – payment of lesser sum cannot discharge the entire debt without new consideration.
Exceptions (Pinnel’s Case):
 Early payment at creditor’s request.
 Payment in a different form or at a different place.
 Fresh consideration present.
Exam Note: Always check for practical or formal variations.

Promissory Estoppel
Principle: Prevents a party from going back on a clear promise that the other party has relied upon, where it would
be inequitable to do so.
Case: Central London Property Trust v High Trees House (1947).
Requirements:
Clear and unequivocal promise or representation.
Reliance by the promisee.
Inequity in allowing promisor to go back on the promise.
Key Feature:
 Promissory estoppel is a shield not a sword.
 Cannot create new causes of action; only prevents enforcement of strict legal rights in certain circumstances.

Exam Tip:
Often used as a defence to prevent enforcement of the full strict legal right where the promisee has relied on a
variation or waiver.

SQE1 EXAM TIP:

When analysing consideration questions, always ask:
Is there fresh consideration?
Is it sufficient (but not necessarily adequate)?
Is it past or present?
Is there practical benefit?
Any exceptions?
Does promissory estoppel apply as a defence?

Introduction to the Intention to Create Legal Relations

A fundamental requirement for contract formation in English law is intention to create legal relations.
Principle:
Parties must demonstrate an intention to enter into a legally binding agreement.
The test is objective: Would a reasonable person regard the agreement as legally enforceable?
Purpose:
 Distinguish social arrangements from legal obligations.
 Ensure certainty and fairness in commercial dealings.
Exam Point: Intention is presumed or rebutted depending on context (social/domestic vs commercial).

The Rebuttable Presumption in the Social and Domestic Context

Principle:
There is a presumption against intention to create legal relations in social and domestic agreements.
Rationale:
Parties typically do not intend family or social arrangements to be legally enforceable.
Key Cases:
 Balfour v Balfour (1919): Husband’s promise to pay maintenance unenforceable while living amicably.
 Jones v Padavatton (1969): Mother’s promise to support daughter’s legal studies lacked legal intent.
Rebutting the Presumption:
 Parties can show evidence of intent to be bound.
 Written agreements or evidence of formality can rebut the presumption.
Example:
 Merritt v Merritt (1970): Agreement between separated spouses enforceable because they intended legal
consequences.

The Rebuttable Presumption in the Commercial Context

Principle:
There is a strong presumption in favour of intention to create legal relations in commercial agreements.
Rationale:
Business dealings are generally assumed to be serious and binding.
Key Case:
 Edwards v Skyways (1964): Even an "ex gratia" payment promise was enforceable in commercial context.
Rebutting the Presumption:
 Clear language excluding legal intent can rebut.
 Honour clauses used to negate intention.
Key Case:
 Rose & Frank v JR Crompton (1925): "Honourable pledge clause" meant no legal enforceability.

The Names of Documents in the Commercial Context

Principle:
The label or title of a document does not conclusively determine its legal effect.
 Courts look at substance over form.
 The actual terms and conduct determine enforceability.
Example:
 A document titled "Heads of Agreement" may be binding if it contains clear terms and shows intention.
 Conversely, "Subject to Contract" generally shows no binding intention.

Comfort Letters
Definition:
Statements of moral or informal assurance typically given by a parent company to support a subsidiary’s obligations.
Legal Effect:
 Usually intended to reassure rather than create binding obligations.
 Courts examine wording carefully.
Key Case:
 Kleinwort Benson Ltd v Malaysia Mining Corp (1989): Comfort letter was a statement of present policy,
not a binding promise.
Exam Note: Comfort letters can be binding if they contain clear promises.

Advertisements
General Principle:
Advertisements are presumed to be invitations to treat, not offers.
 Sellers avoid unlimited contractual liability to all who respond.
 No presumption of binding intent.
Key Case:
 Partridge v Crittenden (1968): Newspaper ad was invitation to treat.
Exception:
 Where advertisement shows clear intention to be bound.
 Carlill v Carbolic Smoke Ball Co (1893): Unilateral offer accepted by performance.
Exam Point: Context and language determine enforceability.

Certainty
For a contract to be enforceable, its terms must be sufficiently certain and complete.
Principle:
Courts cannot enforce vague or ambiguous agreements.
Key Issue:
 Agreement must demonstrate objective certainty of essential terms.
 Essential terms typically include price, subject matter, parties.
Key Case:
 Scammell v Ouston (1941): "Hire-purchase terms" too vague to enforce.
Exam Tip: Certainty is tested objectively – can the court identify clear obligations?

Agreements That Are Too Vague

Principle:
Agreements lacking clear, precise terms are unenforceable.
 Courts will not supply meaning where language is fundamentally unclear.
Key Case:
 Scammell v Ouston: Illustrates unenforceable vagueness.
Example:
 "Reasonable price" may be acceptable if there’s a market rate.
 But "fair terms to be agreed" is generally too vague.

Agreements Where an Essential Term Is Missing

Principle:
A contract may fail for incompleteness if essential terms are missing.
 Courts cannot enforce a contract missing a fundamental term.
Key Case:
 May & Butcher v R (1934): Agreement to agree on price later was unenforceable.
Exception:
 If a mechanism exists to determine missing term.
 Foley v Classique Coaches (1934): Arbitration clause allowed court to enforce price determination.
Exam Tip: Always check if the parties provided a resolution method for uncertainties.

Capacity
Capacity refers to a party’s legal ability to enter into binding contracts.
General Principle:
Certain categories of persons have limited capacity to contract:
 Minors.
 Persons with mental incapacity.
 Intoxicated persons.
 Corporations with limited powers.
Contracts with these parties may be void, voidable, or enforceable only in part.
Exam Point: Capacity protects vulnerable parties but may allow necessary transactions.

Mental Incapacity
Principle:
A contract with a person of unsound mind is voidable if:
 The person did not understand what they were doing.
 The other party knew or ought to have known of the incapacity.
Key Case:
 Imperial Loan Co v Stone (1892): Contract voidable where incapacity was known.
Necessaries Exception:
 A person of unsound mind remains liable to pay for necessaries at a reasonable price.
 Sale of Goods Act 1979 s.3.

Intoxication or Other Mental Incapacity

Principle:
Contracts entered into while intoxicated may be voidable if:
 The person did not understand the nature of the transaction.
 The other party knew of their incapacity.
Key Case:
 Matthews v Baxter (1873): Contract voidable if intoxication prevented understanding.
Ratification:
 Such contracts can be ratified upon regaining sobriety.
Necessaries Exception:
  Liability to pay for necessaries remains.

Contracts with Minors

General Rule:
Minors (under 18) have limited contractual capacity.
Enforceable Contracts:
 Necessaries: Goods or services suitable to the minor’s condition in life.
o Sale of Goods Act 1979 s.3.
o Case: Nash v Inman (1908) – luxury goods not necessaries.
 Beneficial Contracts of Service: Employment or apprenticeship agreements that are for the minor’s benefit.
Voidable Contracts:
 Most other contracts can be avoided by the minor before or shortly after turning 18.
Exam Tip: Always analyse the nature of the contract and the minor’s position.

Corporate Capacity
Principle:
A company’s capacity to contract is determined by its constitution and company law.
 Acts ultra vires (beyond the company's powers) may be unenforceable.
 Modern company law (Companies Act 2006) has largely abolished ultra vires issues for third parties acting in
good faith.
Key Points:
 Companies have legal personality and can generally contract freely.
 Directors must act within company’s objects but third parties usually protected.
 The company's constitution may restrict internal powers but rarely affects third-party enforceability.
Exam Tip: Be clear whether the capacity issue relates to internal governance (directors’ authority) or external
validity.

SQE1 EXAM TIP:

Always analyse intention and capacity systematically:
Intention → Presumptions (social/domestic vs commercial)?
Clear evidence of legal intention?
Certainty → Are terms clear and complete?
Capacity → Any legal limitations (minors, mental incapacity, intoxication, corporate powers)?

Introduction to Privity of Contract

Definition:
Privity of contract is the doctrine that only the parties to a contract acquire enforceable rights and obligations under it.
Traditional Rule:
 A person who is not a party to a contract cannot sue or be sued under that contract.
 Ensures certainty and predictability in contractual obligations.
Key Case:
 Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915)
o Lord Haldane: “Only a person who is a party to a contract can sue on it.”
Purpose of the Rule:
 Respect the bargain struck by the parties.
 Prevents third parties from interfering.
Exam Tip: Always start privity questions with the general rule before moving to exceptions.

Statutory Rights for Third Parties

To address unfairness in the strict privity rule, Parliament enacted reforms to allow third parties to enforce benefits
clearly intended for them.
Main reform: Contracts (Rights of Third Parties) Act 1999 (CRTPA 1999).
  Allows enforcement by third parties in defined circumstances.
 Designed to respect parties’ intentions while avoiding injustice.
Purpose:
 Facilitate commercial arrangements benefiting third parties.
 Reduce need for legal fictions and complex workarounds.

The Contracts (Rights of Third Parties) Act 1999

Key Features of the 1999 Act:
 Creates statutory exceptions to the privity rule.
 Third parties can enforce a contract if certain conditions are met.
Section 1 – Third Party Rights:
A third party may enforce a contractual term if:
The contract expressly provides they may do so.
The term purports to confer a benefit on them, unless it appears the parties did not intend enforcement.
Identification Requirement:
 Third party must be expressly identified by name, class, or description.
 Need not exist at time of contract.
Example:
“X Ltd shall deliver goods to Y” – Y can enforce under CRTPA 1999.

Key Case:
 Nisshin Shipping Co Ltd v Cleaves & Co Ltd (2003)
o Brokers had right to commission; contract contained clause conferring benefit.
Section 2 – Variation and Rescission:
 Once third party rights crystallise, parties cannot vary or rescind without third party’s consent if:
o The third party has assented.
o The promisor is aware of reliance.
Section 3 – Defences:
 Third party enforcement is subject to same defences, set-offs, and counterclaims as between original parties.
Section 6 – Excluded Contracts:
 Bills of exchange, negotiable instruments.
 Contracts of employment.
 Certain carriage of goods by sea contracts.

Exam Tip:
When applying CRTPA 1999, always ask:
Is the third party expressly identified?
Does the term confer a benefit?
Any statutory exclusions?

Excluding the CRTPA 1999

Parties retain freedom of contract to exclude the Act’s operation.
 Can draft clauses stating no third-party rights are conferred.
Typical Clause:
“A person who is not a party to this contract shall have no rights under the Contracts (Rights of Third Parties) Act
1999.”
Commercial practice → many standard terms exclude the Act to avoid unintended enforcement.
Exam Note: Always check if the contract explicitly excludes the Act.

Structures That Give Rights to Third Parties

Even before the 1999 Act, English law developed workarounds to enable third-party benefit in certain cases.
These common law structures remain relevant and operate alongside the Act.
Parties can structure transactions to avoid privity problems.

(a) Assignment
Definition:
 The transfer of existing contractual rights from one party (assignor) to another (assignee).
The assignee becomes entitled to enforce the contract.
 No need to be an original party to sue.
Requirements:
 Valid assignment (often in writing, with notice).
 Choses in action assignable.
Exam Tip: Assignment deals with rights after formation, not formation itself.

(b) Agency
Principle:
 Agent contracts on behalf of principal.
 Principal, though not named on face of contract, becomes bound.
Effect:
 Bypasses privity rule because principal is treated as a party through the agent.
Exam Point:
Agency creates direct contractual link between principal and third party.

(c) Collateral Contracts

Definition:
 A separate, ancillary contract that supports the main transaction.
Effect:
 Allows a third party to sue on a promise made directly to them.
Key Case:
 Shanklin Pier Ltd v Detel Products Ltd (1951)
o Detel promised paint durability directly to pier owners despite contract with contractor.

(d) Trusts Created by Contract

Principle:
 A contracting party may hold contractual rights on trust for a third party.
Enables enforcement by the beneficiary.
Key Case:
 Les Affréteurs Réunis SA v Walford (1919)
o Charterers held payment obligation on trust for brokers.

What Remedies Can the Promisee Under a Contract Exercise for a Third Party?
Under common law and the 1999 Act, a promisee may still seek remedies to protect a third party’s interests.

(a) Damages
Promisee may recover damages even if loss is suffered by a third party.
Key Case:
 Jackson v Horizon Holidays Ltd (1975)
o Father recovered damages for family members’ distress.
The St Martins Property Exception:
 Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd; St Martins Property Corp Ltd v Sir Robert
McAlpine Ltd (1994).
 Developer could recover damages for defective work intended for third-party purchasers.
 Recognises “legal black hole” problem if third party cannot sue and promisee suffers no direct loss.
Exam Tip:
Promisee can recover substantial damages if contract intended to benefit third party.

(b) Specific Performance

Equitable remedy compelling actual performance of contract terms.
 Available where damages are inadequate.
 Particularly useful for unique goods or land.
Can protect third-party benefit by enforcing contractual obligation.
Example:
 Beswick v Beswick (1968)
o Widow enforced nephew’s payment obligation to herself as administratrix via specific performance.

(c) Injunctions
Equitable remedy restraining breach of contract.
 May prevent a contracting party from acting contrary to the contract to the detriment of an intended third-
party beneficiary.
Equitable Discretion:
 Court considers balance of convenience.
 Must show damages are inadequate.

Contracts of Convenience
Meaning:
 Not a formal legal category, but describes contracts structured to achieve practical objectives, often bypassing
privity barriers.
Examples:
 Indemnities.
 Back-to-back contracts in construction supply chains.
 Express third-party beneficiary clauses using CRTPA 1999.
Purpose:
 Commercial parties structure deals to ensure enforceability.
 Avoid reliance solely on legal exceptions.

SQE1 EXAM STRATEGY:

Always analyse privity questions in order:
State the general rule (only parties can enforce).
Apply Contracts (Rights of Third Parties) Act 1999 – s.1 conditions?
Exclusion clauses?
Common law exceptions (assignment, agency, collateral contract, trust)?
Remedies available?
Any equitable solutions (specific performance, injunction)?

EXAM TIP:
“The 1999 Act supplements, but does not abolish, common law exceptions. Always consider both.”

Introduction to Terms, Representation and Puff

A fundamental aspect of contract law is distinguishing between different types of pre-contractual statements.
Puff: Mere sales talk with no legal effect.
Representation: A statement inducing entry into the contract, which may give rise to remedies if false.
Term: A binding contractual promise forming part of the agreement.
Purpose:
 Define what obligations are enforceable.
 Clarify remedies for breach or misrepresentation.
Exam Tip: Always classify pre-contractual statements carefully, as the remedies differ significantly.
How Can You Tell Whether a Pre-Contractual Statement Is a Puff?
Definition of Puff:
 An exaggerated or promotional statement that no reasonable person would take literally.
 Not intended to have legal effect.
Indicators:
 Vague, subjective language.
 Obvious sales talk.
 No serious promise.
Case Example:
 Carlill v Carbolic Smoke Ball Co (1893) – not a puff because of the deposit of £1000 showed serious intent.
Exam Point:
 Always check context, language, and seriousness of the statement.

How Can You Tell Whether a Pre-Contractual Statement Is a Term or a Representation?

Key Distinction:
 Term: Contractually binding promise.
 Representation: Persuades entry into contract but is not part of it.
Importance:
 Breach of term = damages for breach of contract.
 Misrepresentation = remedies depend on nature of misrepresentation.

The Common Law Tests to Determine Whether a Pre-Contractual Statement Is a Term or a Representation
Factors considered by courts:
 Importance of the statement to the recipient.
 Timing of the statement relative to contract formation.
 Specialist knowledge of the party making the statement.
 Whether the statement was reduced to writing.
Key Cases:
 Bannerman v White (1861) – importance of statement about sulphur-free hops made it a term.
 Routledge v McKay (1954) – delay between statement and contract suggested it was a representation.
 Dick Bentley Productions Ltd v Harold Smith Motors Ltd (1965) – expert seller’s statement treated as term.
 Oscar Chess Ltd v Williams (1957) – non-expert seller’s mistaken statement treated as representation.
Exam Tip:
Always apply the factors to the fact pattern in the scenario.

The Parol Evidence Rule and Pre-Contractual Statement

Parol Evidence Rule:
 Where there is a written contract intended as final, extrinsic evidence cannot add to, vary, or contradict its
terms.
Effect on pre-contractual statements:
 Oral statements may be excluded if the contract is fully integrated.
 Exception: establishing misrepresentation, mistake, fraud, or that document was not intended as the whole
agreement.
Exam Tip:
Be ready to discuss when parol evidence is admissible.

Using Statute to Determine Whether a Pre-Contractual Statement Is a Term or a Representation

Statutory intervention can determine classification:
 Consumer Rights Act 2015 (CRA):
o Trader statements about goods/services are treated as terms if relied upon.
 Misrepresentation Act 1967:
 o Remedies for false representations.
Example:
 CRA s.11: description relied upon by consumer becomes a term.

The Legal Consequences of Pre-Contractual Statements That Are Terms and Representations
Term:
 Breach = damages for breach of contract.
 May allow termination if breach of condition.
Representation:
 If false → misrepresentation remedies.
o Rescission (setting aside the contract).
o Damages (fraudulent, negligent, innocent).
Exam Tip:
Remedies depend on classification; always explain consequences.

Implied Terms
Definition:
 Terms not expressly stated but included by law or courts to reflect parties’ presumed intentions or for policy
reasons.
Importance:
 Fills gaps in contracts.
 Ensures fairness and commercial workability.
Exam Tip:
Identify source of implication: by fact, by law, by custom, by statute.

Terms Implied by the Courts

Courts imply terms to make contracts effective and fair.
Two main categories:
Terms implied in fact.
Terms implied in law.

(a) Terms Implied in Fact

Reflect the parties’ presumed intentions.
Courts use two key tests:
 Business Efficacy Test: term necessary to make contract work (The Moorcock).
 Officious Bystander Test: so obvious both parties would agree (Shirlaw v Southern Foundries).
Purpose:
 Ensure commercial sense.
 Fill obvious gaps.

(b) Terms Implied in Law

Imposed regardless of parties’ intentions for certain classes of contracts.
Examples:
 Employment contracts → duty of mutual trust and confidence.
 Landlord-tenant → obligation to keep premises habitable.
Exam Tip:
Terms implied in law apply to all contracts of that type.

(c) Terms Implied by Custom

Recognised local or trade customs can imply terms.
Requirements:
 Certain, notorious, reasonable, and consistent with express terms.
Case Example:
 Hutton v Warren (1836) – customary allowance implied in lease.

(d) Terms Implied by Statute

Parliament may impose terms into contracts.
Ensures protection, especially for consumers and weaker parties.
Can be mandatory or default rules.

(e) Terms Implied by Statute in the B2B Regime

Sale of Goods Act 1979 (SGA):
 Implied terms about title (s.12), description (s.13), quality (s.14), and fitness for purpose.
 May be excluded subject to reasonableness test (UCTA 1977).
Supply of Goods and Services Act 1982:
 Reasonable care and skill in services.
Exam Tip:
In B2B, parties often negotiate to exclude implied terms within legal limits.

(f) Terms Included by Statute in the B2C Regime

Consumer Rights Act 2015 (CRA):
 Implies mandatory terms into consumer contracts.
Examples:
 Goods must be of satisfactory quality, fit for purpose, and match description.
 Services must be performed with reasonable care and skill.
Cannot be excluded or limited unfairly.
Purpose:
 Protect consumers from unfair terms and poor-quality goods/services.

The Interpretation of Contract Terms

Courts interpret contract terms to determine their true meaning and effect.
Modern approach: Objective test.
 What would a reasonable person with all background knowledge understand the terms to mean?
Key Cases:
 Investors Compensation Scheme Ltd v West Bromwich Building Society (1998) – Lord Hoffmann’s principles.
 Rainy Sky SA v Kookmin Bank (2011) – preference for business commonsense.
Exam Tip:
Consider entire agreement, factual matrix, commercial purpose, and avoid absurd results.

SQE1 EXAM STRATEGY:

Always identify:
Is it a puff, representation, or term?
If term: express or implied?
Source of implied term?
Statutory protections?
Remedies for breach or misrepresentation?
How would a court interpret the term?
Introduction to Unfair Terms and Exemption Clauses
Exemption clauses are contract terms that limit or exclude a party’s liability for breach of contract, negligence, or
other failures.
They allocate risk between contracting parties.
Can be found in many standard form contracts, e.g. transport tickets, service agreements, business supply contracts.
Unfair terms go further: they can be any terms that create a significant imbalance in the parties’ rights and
obligations, to the detriment of the weaker party, typically the consumer.
Purpose of regulation:
 Protect parties with weaker bargaining power.
 Ensure transparency and fairness in contracts.
EXAM TIP:
Always check: (1) Has the clause been properly incorporated? (2) Is the wording clear? (3) Is the clause fair or
reasonable?

Incorporation of Unfair Terms

For any exemption clause to be enforceable, it must be incorporated into the contract.
Incorporation means making sure the term is part of the agreement, accepted by both parties.
Courts test whether the term was fairly brought to the other party’s attention.
Main methods of incorporation:
 By signature
 By notice (reasonable and timely)
 By a consistent course of dealing
 By industry custom or common knowledge

Incorporation by Signature
The general rule → a party is bound by what they sign.
Even if they haven’t read it.
Key Case:
 L’Estrange v Graucob (1934)
o Signed order form contained exclusion clause.
o Held: signature binds, despite not reading.
Exception:
Where signature was obtained by fraud or misrepresentation → clause is not binding.

A Person Signs a Document as a Result of Fraud or Misrepresentation

Fraud or misrepresentation invalidates the incorporation of the clause.
Key Case:
 Curtis v Chemical Cleaning and Dyeing Co (1951)
o Customer asked about clause; told it only excluded certain damages.
o In fact, it excluded all liability.
o Held: Misrepresentation prevented the clause from being effective.
EXAM TIP:
Misrepresentation can make exemption clauses unenforceable.

Non Est Factum

Latin for “It is not my deed.”
Available when a person signs a document fundamentally different from what they intended without negligence.
Strictly applied to protect integrity of signatures.
Key Case:
 Saunders v Anglia Building Society (1971)
o Elderly woman misled about signing transfer of property.
o Defence failed: insufficient difference and she was careless.
Criteria:
Fundamental difference.
No negligence by signer.

The Document Signed Does Not Normally Have Contractual Effect

Signing only incorporates terms if the document is one a reasonable person would expect to be contractual.
Mere receipts or informal notes may not suffice.
Example:
 A parking ticket with no clear terms on its face.

Incorporation by Reasonable Notice

Terms can be incorporated even without signature if the party relying on them gives reasonable notice before or at
contract formation.
Key Case:
 Parker v South Eastern Railway Co (1877)
o Ticket had terms on the back.
o Reasonable steps must bring it to attention.
Principle:
Reasonable steps to inform the other party are required.

Timely Notice
Notice of terms must be given before or at the time of contracting.
Post-contract notice is ineffective.
Key Case:
 Olley v Marlborough Court Hotel (1949)
o Notice on hotel room wall too late.
o Contract formed at reception desk.
EXAM TIP:
Timing of notice is crucial.

Reasonable Steps Must Be Taken to Bring the Term to the Notice of the Other Party
The more unusual or onerous the term, the greater the effort needed to highlight it.
Key Case:
 Thornton v Shoe Lane Parking (1971)
o Exclusion clause inside car park was too late and too hidden.
o "Red hand rule": unusual terms need special attention.
Key Point:
Prominent warning or clear notice required.

The Document Must Be One with Contractual Effect

Only documents a reasonable person would expect to contain contractual terms can incorporate them.
Key Case:
 Chapelton v Barry UDC (1940)
o Deckchair ticket seen as a receipt, not a contract document.
Principle:
Nature of document matters.

Incorporation by Consistent Course of Dealing

Terms can be implied if parties have a consistent and regular history of using those terms.
Key Case:
 McCutcheon v David MacBrayne Ltd (1964)
o Irregular use of risk note meant no incorporation.
EXAM TIP:
Consistency and regularity are essential.

Incorporation by Common Knowledge/Awareness of Industry Practice

Standard terms in an industry may be implied if both parties are aware of them and accept them as usual.
Key Case:
 British Crane Hire Corp Ltd v Ipswich Plant Hire Ltd (1975)
o Both businesses knew standard terms were common.
Key Point:
Mutual knowledge of standard practice is needed.

As a Matter of Interpretation, Is the Claim Covered by the Wording in the Exemption Clause?
Courts interpret exemption clauses strictly.
Clause must clearly cover the liability in question.
Ambiguity resolved against the party relying on it (contra proferentem rule).
Key Case:
 Canada Steamship Lines Ltd v R (1952)
o Guidelines for excluding negligence liability.
Exam Tip:
Careful wording is vital.

The Contra Proferentem Rule

If a term is ambiguous, it is construed against the party seeking to rely on it.
Especially strict with exemption clauses.
Key Case:
 Hollier v Rambler Motors (AMC) Ltd (1972)
o Ambiguous exclusion of fire damage not enforced.
Key Point:
Burden on drafter to be clear.

Exemption Clauses and Negligence

To exclude negligence liability, clear words must be used.
Canada Steamship Test:
Does clause expressly mention negligence?
Are words wide enough to cover negligence?
Is there another basis of liability the words could cover?
Exam Tip:
Courts disfavor reading negligence exclusion unless crystal clear.

Statutory Control of Exemption Clauses in Respect of Death or Personal Injury Resulting from Negligence
UCTA 1977, s.2(1) → absolutely prohibits excluding or limiting liability for death or personal injury due to
negligence.
No reasonableness test – simply void.
Exam Tip:
Always spot and mention this absolute statutory bar.

Common Law Rules That Apply to Attempts to Exclude Liability for Negligence
Strict interpretation required.
Contra proferentem rule applies.
Fundamental breach doctrine → courts reluctant to enforce clauses that destroy the contract’s purpose.
Key Point:
Protects fairness and prevents abuse.
Negligence Liability Other Than for Death or Personal Injury
UCTA 1977, s.2(2) → other negligence liability can be excluded or limited if reasonable.
Reasonableness test evaluates fairness given the circumstances.
Factors:
 Relative bargaining power.
 Availability of alternatives.
 Clarity of wording.

Is the Exemption Clause or Unfair Term Rendered Ineffective by Statute?

Statutory tests can render clauses unenforceable.
UCTA (B2B) → reasonableness test.
CRA (B2C) → fairness test.
Exam Tip:
Always check applicable statutory framework.

The Statutory Control of Exemption Clauses in the B2B Regime

UCTA 1977 applies to business-to-business contracts.
Prohibits exclusion of liability for death/personal injury.
Other exclusions subject to reasonableness test.
Reasonableness factors (Schedule 2):
 Relative bargaining strength.
 Whether the customer knew or should have known of the term.
 Availability of alternatives.

Liability for Breach of Contract

Exemption clauses often aim to limit or exclude liability for breach.
Courts check:
 Incorporation.
 Clarity.
 Statutory limits.
Key Point:
Cannot exclude essential obligations if this defeats the contract’s purpose.

What Is Reasonable?
UCTA s.11 test:
 Term must be fair and reasonable given circumstances at time of contracting.
Factors include:
 Bargaining power.
 Availability of alternatives.
 Clarity and prominence of term.
 Practical consequences of enforcement or non-enforcement.
Exam Tip:
Reasonableness is objective and fact-specific.

The Statutory Control of Unfair Terms and Exemption Clauses in the B2C Regime
Consumer Rights Act 2015 (CRA) applies to consumer contracts.
Prohibits excluding statutory implied terms.
All terms must be transparent and fair.
Fairness test under s.62: Significant imbalance to consumer’s detriment, contrary to good faith.
Key Point:
Cannot contract out of consumer protections.
What Is an Unfair Term?
CRA s.62 defines unfair term as causing significant imbalance, contrary to good faith.
Examples:
 Hidden charges.
 One-sided termination rights.
 Excessive penalties.
Enforcement: Courts can refuse to enforce unfair terms or strike them out.
Exam Tip:
Transparency and prominence help avoid unfairness findings.

SQE1 EXAM STRATEGY:

Always check:
Was the term properly incorporated?
Does the wording clearly cover the liability?
Is the clause controlled by statute?
Does reasonableness or fairness test apply?
Is there any absolute statutory prohibition?

Introduction to Misrepresentation
Misrepresentation is a false statement of fact (or law) made by one contracting party to another, which induces that
other party to enter into the contract.
A misrepresentation does not make the contract void, but voidable. This means the innocent party can choose to
rescind (set aside) the contract.
The law of misrepresentation aims to ensure fairness by preventing parties from entering contracts under false
pretences.
Misrepresentation is distinct from breach of contract because it addresses pre-contractual false statements rather than
failure to perform agreed terms.
Purpose in English Law:
 Protect parties from being deceived.
 Encourage honest dealings.
 Balance contractual freedom with fairness.
Exam Tip:
Always ask: Is there (1) a false statement of fact/law, (2) inducing entry, (3) with sufficient materiality?

Unambiguous
For a statement to be actionable as misrepresentation, it must be unambiguous.
It should be clear enough that its meaning is objectively ascertainable.
Ambiguous or vague statements may not be reliably interpreted as false representations.
Example:
 "This is the best car ever!" is likely puff, not an unambiguous factual statement.
Exam Tip:
Watch out for puffery that cannot be objectively false.

False
The core element is that the statement must be false when made.
Falsity can be direct (a lie) or indirect (misleading impression).
A representation is false if it is incorrect in a material respect and induces the contract.
Example:
 Selling a car as "one owner, accident-free" when it had multiple owners and accidents.

False Due to a Change in Circumstances

Even if true when first made, a statement may become false before the contract is finalised.
Duty to correct if aware of the change.
Failure to update = misrepresentation.
Key Case:
 With v O’Flanagan (1936) – Seller of a medical practice reported high income, which declined before sale,
and did not correct the figure.
Principle:
Silence in face of change can mislead.

Statement
There must be a representation – an assertion of fact or law.
Statements can be oral, written, or even implied through conduct.
Silence alone generally is not misrepresentation unless exceptional circumstances impose a duty to speak.

Conduct
Conduct can be equivalent to a statement.
Deliberate behaviour giving a false impression = misrepresentation.

Case:
 Spice Girls Ltd v Aprilia World Service BV (2000) – Participating in promo while knowing member was
leaving misled sponsor.
Exam Tip:
Look for acts as well as words.

Failure to Disclose All the Relevant Facts

English law usually imposes no general duty of disclosure.
Caveat emptor – let the buyer beware.
Exceptions exist (e.g., insurance contracts of utmost good faith).
BUT partial truths that mislead can amount to misrepresentation.
Example:
 Mentioning positives while hiding significant negatives that distort overall impression.

Not the Whole Truth

Half-truths are actionable.
A statement may be literally true but misleading because it omits crucial information.
Case:
 Dimmock v Hallett (1866) – Describing land as “fertile” while omitting tenants’ notice to quit.
Principle:
Must tell the “whole truth” where partial disclosure would mislead.

Statements of Fact or Law

Must be about fact or law.
Historically, statements of law weren’t actionable, but now legal misrepresentations can be.
Case:
 Pankhania v Hackney LBC (2002) – Misrepresentation about legal status of property (contractual licence vs
tenancy).
Exam Tip:
Always check if statement is of fact or law, not opinion.

Statements of Opinion or Belief

Opinions generally not actionable.
Recognised as non-factual, subjective.
Exception if opinion implies underlying facts.
Example:
 “I think the land will support 2,000 sheep” → implies knowledge or investigation.

Statements of Opinion or Belief Where the Representor Knows the Fact

An opinion can be misrepresentation if representor knows facts contradict it.
Dishonest opinions are actionable.
Case:
 Smith v Land & House Property Corp (1884) – Seller described tenant as "desirable" while knowing he was in
arrears.
Exam Tip:
Consider representor’s knowledge and expertise.

Statement of Intention
Future intention is not generally misrepresentation.
Exception → if there is no actual intention.
Case:
 Edgington v Fitzmaurice (1885) – Company misrepresented purpose of loan funds.

Key Point:
Lies about intent = misrepresentation.

The Statement Must Induce the Representee to Enter Into the Contract
Must have caused the other party to enter into the contract.
Reliance can be partial – need not be the sole reason.
Objective test → would a reasonable person be influenced?
Exam Tip:
No inducement = no misrepresentation claim.

The Statement Must Be Material

Materiality means the statement would influence a reasonable person’s decision.
Presumption of inducement if statement is material.
Non-material statements cannot found a claim.

The Representee Must Be Aware of the Statement

No misrepresentation if the representee never heard or saw the statement.
Must prove knowledge of the representation before contract formed.
Exam Tip:
Can't rely on something you didn’t know about.

The Representor Must Intend the Representee to Act on the Statement

Representor must intend, or reasonably expect, the other party to rely on the statement.
Objective standard – inferred from circumstances.

The Representee Must Act on the Statement in Question

Must show reliance on that statement.
Need not be sole factor, but must be a real factor in decision.

Did the Statement Materially Contribute to the Act

Misrepresentation need only materially contribute to entering the contract.
Courts don’t require it to be decisive or exclusive cause.
Exam Tip:
Partial reliance suffices.

Causation Is Presumed If the Statement Is Fraudulent and Material

Fraudulent misrepresentation triggers presumption of reliance if statement is material.
Shifts burden of proof to representor to show no reliance.
Key Principle:
Courts are stricter with fraud to deter dishonesty.

What if the Representee Makes His Own Investigation

Independent investigation does not necessarily defeat reliance.
Unless investigation uncovers the truth.
Case:
 Redgrave v Hurd (1881) – Buyer entitled to rely on false statement despite opportunity to verify.
Exam Tip:
Failure to investigate doesn't bar claim if trust was placed.

What if the Representee Fails to Test the Accuracy of the Statement

No general duty to verify statements.
Failure to test accuracy doesn’t prevent claim unless grossly unreasonable.
Duty shifts if obvious red flags exist.

The Categories of Misrepresentation and Their Remedies

Three categories:
1. Fraudulent – deliberate deceit.
2. Negligent – careless false statement.
3. Innocent – honestly believed, reasonable basis.
Remedies vary by type.

Fraudulent Misrepresentation
Defined in Derry v Peek (1889).
Made knowingly, without belief in truth, or recklessly.
Remedies:
 Rescission of contract.
 Tort damages → all direct loss, including consequential losses.
 No remoteness limit.

Remedies for Fraudulent Misrepresentation

Rescission: Returns parties to pre-contract position.
Damages: As for tort of deceit, full losses recoverable.
May include consequential and unforeseeable losses.
Exam Tip:
Courts aim to punish fraud.

Negligent Misrepresentation
Made carelessly, without reasonable grounds.
Can arise:
 At common law (Hedley Byrne duty of care).
  Under Misrepresentation Act 1967.

Negligent Misrepresentation at Common Law

Hedley Byrne v Heller (1964) – Duty of care in giving advice.
Requires special relationship.
Elements: Duty, breach, reliance, causation, loss.
Remedies:
 Damages in tort.
 No strict rescission right.

Remedies for Negligent Misrepresentation at Common Law

Damages in tort.
Aim to restore to position as if misrepresentation not made.
Rescission may be available if other requirements met.

Negligent Misrepresentation under the Misrepresentation Act 1967

s.2(1) → Claimant proves misrepresentation and reliance.
Burden shifts to representor to prove reasonable grounds.
No need to prove special relationship or duty of care.

Remedies for Negligent Misrepresentation under the Misrepresentation Act 1967

Rescission of contract.
Damages assessed as if fraudulent (same measure as deceit).
Court may award damages in lieu of rescission (s.2(2)).

Innocent Misrepresentation
Made with reasonable belief in its truth.
No fault element.
Historically rescission only.
Misrepresentation Act 1967 introduced damages in lieu.

Remedies for Innocent Misrepresentation

Rescission → Equitable relief restoring parties.
Damages in lieu of rescission → s.2(2) discretion of court.
Aim: Fairness when rescission is disproportionate or unjust.

SQE1 EXAM STRATEGY:

 Always identify:
o Is there a false statement of fact/law?
o Was it unambiguous and material?
o Did it induce entry?
o What category of misrepresentation?
o What remedies are available?

Mıstake, Duress, Undue Influence And Illegality

Mistake
In English contract law, “mistake” refers to an erroneous belief held by one or both parties at the time the contract was
formed.
Mistake is important because it may prevent true consensus ad idem (meeting of the minds).
Mistake can make a contract void (no legal effect from the start) rather than voidable (valid until rescinded).
It is narrower than misrepresentation because it does not involve wrongdoing by one party.
Courts are cautious in granting relief for mistake—need for certainty in commercial transactions.
Key Principles:
 Types of mistake (mutual, unilateral).
 Impact on contract validity.
 Allocation of risk in contract terms.
Exam Tip:
Always identify the nature of the mistake and whether it goes to a fundamental term.

Mutual Mistake
A mutual mistake occurs when both parties are mistaken about the same fundamental fact.
The mistake must destroy the basis of agreement: the parties are not truly agreeing on the same thing.
If the subject matter is different from what both thought, there is no contract.
Case: Couturier v Hastie (1856) – sale of corn which had already perished. No contract existed as both believed it
existed.
Key Elements:
 Both parties share same incorrect assumption.
 Mistake must be fundamental.
 Contract is void (no legal effect).
Exam Tip:
Mutual mistake = no consensus ad idem.

The Impact of One Party Being at Fault for the Mistake

Mistake relief is less likely if one party caused or contributed to the error.
Courts will not assist a party whose own negligence led to the mistake.
If a mistake arises because of a party’s fault (e.g., failing to read or check), they may be bound.
Allocation of risk: often dealt with in contract terms (entire agreement clauses, disclaimers).
Example:
 A buyer failing to inspect goods cannot claim mistake if defect was discoverable.
Exam Tip:
Always ask: Did the claimant's own fault cause the mistake?

Unilateral Mistake
Occurs when only one party is mistaken about a term or fact, and the other party knows or ought to know of the
mistake.
Generally, contract is valid unless the other party exploits or is aware of the mistake.
Courts may void if the mistake is fundamental and known to the other side.
Case: Hartog v Colin & Shields (1939) – buyer snapped up offer with mistaken price. Contract void.
Key Elements:
 Mistake by one party.
 Knowledge or constructive knowledge by other party.
 Must relate to fundamental term.
Exam Tip:
Unilateral mistake requires knowledge and exploitation.

Mistake as to Identity
Mistake as to identity arises when a party believes they are contracting with one person, but it is actually another.
Significant in fraud cases—impacts title to goods.
Whether contract is void (no title passes) or voidable (title passes but can be rescinded) is crucial.
Law distinguishes face-to-face and distance dealings.
Exam Tip:
Focus on intention: with whom did they intend to contract?

Mistake as to Identity in Face to Face

In face-to-face transactions, presumption is intention to deal with the person physically present.
Even if name given is false, the contract is with the person present.
Contract is usually voidable for fraud, not void for mistake.
Case: Phillips v Brooks (1919) – jeweller contracted with man in shop despite false name.
Key Point:
Very difficult to argue void for mistake in face-to-face sales.

Mistake as to Identity in Communication at a Distance

No presumption of dealing with the physical person.
Identity is often fundamental at distance—reliance on names or reputations.
Case: Cundy v Lindsay (1878) – seller believed they dealt with reputable firm. Contract void for mistake.
Exam Tip:
At a distance, misrepresentation of identity is more likely to void the contract.

Duress
Duress occurs when a party is forced into a contract by threats or illegitimate pressure.
Vitiates genuine consent → contract becomes voidable.
Categories:
 Duress to the person.
 Duress to goods.
 Economic duress.
Courts require proof of illegitimate pressure that left no realistic alternative.
Case:
 Universe Tankships v ITWF (1983) – payment demanded to release ship = economic duress.
Key Elements:
 Pressure must be illegitimate.
 Causation: Did pressure induce contract?
 Lack of practical choice.
Exam Tip:
Economic duress is common in commercial disputes.

Undue Influence
Undue influence arises when one party takes advantage of a position of power over another.
Equitable doctrine.
Protects relationships of trust and prevents abuse.
Makes contracts voidable.
Divided into actual and presumed undue influence.
Exam Tip:
Distinguish between actual and presumed influence.

Actual Undue Influence

Requires proof of overt acts of improper pressure or coercion.
Claimant must prove manipulation or exploitation.
Case: Williams v Bayley (1866) – father pressured to give security to avoid son's prosecution.
Key Elements:
  Clear evidence of coercion.
 Focus on conduct.
Exam Tip:
Harder to prove than presumed undue influence.

The Effect of Third Party Undue Influence

A contract may be set aside if undue influence by a third party affects one party and the other contracting party had
notice.
Banks/lenders often affected.
If they knew or ought to have known, they may be bound.
Case: Barclays Bank v O’Brien (1994) – bank fixed with notice of husband's misrepresentation to wife.
Key Point:
Courts protect vulnerable guarantors.

Actual Notice and Constructive Notice

Banks and lenders must avoid being fixed with notice of undue influence.
Actual Notice: Lender knows of undue influence.
Constructive Notice: Lender ought to have known given circumstances.
Duty to take reasonable steps to ensure consent is informed and voluntary.
Exam Tip:
Notice triggers duty of inquiry.

What Are Reasonable Steps

Steps lenders must take to avoid liability for undue influence.
Clear explanation of transaction terms.
Recommendation of independent legal advice.
Ensuring understanding and voluntariness.
Case: Royal Bank of Scotland v Etridge (No 2) (2001) – guidelines for banks.
Key Principle:
Failure to follow steps may fix lender with notice.

Presumed Undue Influence

Presumed undue influence arises from certain relationships of trust and confidence.
No need for proof of overt acts.
Claimant must show:
 Relationship of trust.
 Transaction calls for explanation.
Burden shifts to defendant to rebut.
Exam Tip:
Focus on relationship and suspicious transaction.

Presumed Undue Influence and the Evidential Burden

Once relationship and suspicious transaction shown:
Presumption arises.
Defendant must prove transaction was free, informed, voluntary.
Case: Allcard v Skinner (1887) – nun's large gift presumed undue influence.

Key Point:
Rebuttal often needs evidence of independent advice.

Presumed Undue Influence Relationships of Trust and Confidence (Class 2A)

Automatic presumption arises in certain recognised relationships.
Examples:
 Parent/child.
 Solicitor/client.
 Doctor/patient.
 Religious advisor/follower.
Law recognises inherent trust imbalance.
Exam Tip:
Class 2A = automatically presumed relationships.

Presumed Undue Influence Relationships of Trust and Confidence (Class 2B)

Presumption can arise in other relationships shown to involve trust.
Not automatic—claimant must prove trust and dependency.
Examples:
 Close friends.
 Partners with financial inequality.
Courts assess facts to determine existence of trust.
Exam Tip:
Class 2B = factual proof required.

Illegality
Illegality concerns contracts prohibited by law or contrary to public policy.
Courts will not enforce illegal agreements.
Contract may be void or unenforceable.
Two main sources:
 Statute.
 Common law/public policy.
Exam Tip:
Always ask: Is the purpose or performance illegal?

Illegal Under Statute

Contracts may be illegal if prohibited by legislation.
Express prohibitions (e.g., unlicensed trading).
Implied prohibitions (frustrating statutory purpose).
Case: St John Shipping v Joseph Rank (1957) – overloading ship contrary to statute.
Key Principle:
Purpose of statute critical in assessing enforceability.

Illegal at Common Law

Agreements contrary to fundamental principles of law, morality, or justice.
Examples:
 Contracts to commit crime or tort.
 Corruption.
 Obstructing justice.
Courts will not assist in enforcing such contracts.
Exam Tip:
Look for unlawful purpose or performance.

Agreements That Conflict with Public Policy

Contracts may be unenforceable if they harm society’s interests.
Includes:
 Contracts to stifle prosecution.
 Contracts corrupting public life.
  Interfering with legal proceedings.
Judges use caution—public policy evolves over time.
Key Principle:
Balances freedom of contract with societal interests.

Agreements in Restraint of Trade

Contracts restricting a party’s ability to work or trade.
Presumed void unless reasonable:
 Protects legitimate business interests.
 Reasonable in scope, duration, geography.
Common in employment and sale of business.
Case: Nordenfelt v Maxim Nordenfelt (1894) – upheld global restraint with justification.
Exam Tip:
Always assess reasonableness carefully.

SQE1 EXAM STRATEGY:

 Identify the issue (mistake, duress, undue influence, illegality).
 Classify the type (e.g., unilateral mistake, actual undue influence).
 Apply legal tests and principles.
 Use case-law to support analysis.
 Determine effect on contract (void, voidable, unenforceable).

THE DISCHARGE OF CONTRACTS

Performance
Performance is the primary way in which contracts are discharged.
When both parties perform as required, the contract ends because there’s nothing more to do.
Contract law is based on enforcing promises. Performance ensures the agreement’s purpose is fulfilled.
Example: Delivering goods on time and paying the agreed price.
If performance is incomplete or defective, it can be a breach unless the other party accepts it.
Exam Tip:
Always check the contract terms carefully: what exactly was promised?

Strict Contractual Obligations

Strict obligations require precise, exact compliance.
Even minor deviations can mean breach. The law here is tough—it protects certainty.
Case: Cutter v Powell (1795) – sailor agreed to full voyage, died before completing, no partial payment.
This harsh rule ensures parties stick to what they agreed.
Example: Delivering 99 out of 100 items when contract says 100 = breach.
Key Point:
Entire obligation must be fully performed unless contract allows otherwise.

Qualified Contractual Obligations

Some obligations are not strict but qualified.
Performance is acceptable if it meets a reasonable standard, even if not perfect.
Common in service contracts – e.g., professional services must show reasonable skill and care but not guarantee a
perfect result.
Example: A doctor performing surgery with reasonable care is not liable just because the outcome wasn’t as hoped.
Key Point:
Law recognises that not all promises require exact, perfect performance.

Repudiatory Breach
A repudiatory breach is a serious breach that goes to the root of the contract.
It is so fundamental that the innocent party is entitled to treat the contract as ended.
The innocent party may:
 Terminate the contract.
 Sue for damages.
Example: Failing to deliver critical machinery on time when timing is crucial for buyer’s production line.
Key Principle:
Law protects the right to walk away if the breach destroys the contract’s value.

Anticipatory Repudiatory Breach

Occurs when one party says in advance they will not perform.
The other party doesn’t have to wait until the actual breach.
Can terminate immediately and claim damages.
Case: Hochster v De la Tour (1853) – courier dismissed before starting.
Protects the innocent party from uncertainty and wasted preparation.
Key Point:
Allows early exit from a deal when the other side won’t comply.

How to Determine Whether a Breach Is Repudiatory

Not every breach is repudiatory.
Courts ask: Does the breach deprive the innocent party of substantially the whole benefit?
It depends on:
 The importance of the term breached.
 The effect of the breach on contract performance.
Minor breaches do not justify termination.
Exam Tip:
Always focus on impact, not labels alone.

Common Law Guidance to Determine Whether a Breach Is Repudiatory

Common law uses a flexible test.
Case: Hong Kong Fir Shipping v Kawasaki (1962) introduced innominate terms.
The question is not just if a condition or warranty was breached, but how serious the breach was.
Courts examine if the breach substantially deprives the other party of what they contracted for.
Example: Engine breakdown delays ship hire for 2 months → context decides if it’s serious enough.

Statutory Guidance to Determine Whether a Breach Is Repudiatory

Statutes set clearer rules for certain types of contracts.
Sale of Goods Act 1979: breach of a condition entitles rejection.
Consumer Rights Act 2015: sets clear consumer remedies for breach.
Key Point:
Statute can override or supplement common law rules.

Statutory Guidance in the B2B Context

Business-to-business contracts often rely on the Sale of Goods Act 1979.
Distinguishes between conditions and warranties.
Breach of condition → termination and damages.
Breach of warranty → damages only.
B2B parties often negotiate and allocate risk explicitly.
Example: Specified delivery date as condition = failure allows rejection.

Statutory Guidance in the B2C Context

Consumer Rights Act 2015 protects consumers.
Minimum standards for goods (satisfactory quality, fit for purpose).
Clear remedies: repair, replacement, refund.
Empowers consumers against powerful traders.
Key Point:
Designed to ensure fairness and reduce imbalances.

Warranties
Less important contract terms.
Breach does not allow termination but allows claiming damages.
Often cover secondary obligations.
Example: Minor specifications about packaging quality.
Sale of Goods Act distinguishes warranty from condition.
Key Principle:
Encourages proportionate remedies.

Innominate Terms
Terms not fixed as condition or warranty.
Case: Hong Kong Fir Shipping created this flexible category.
The consequence of breach decides remedy.
Serious breach = termination and damages.
Minor breach = damages only.
Example: Delays in ship delivery → is it fundamental or tolerable?
Key Point:
Courts focus on practical effect.

The Entire Obligations Rule

Rule that requires full performance before payment is due.
Harsh but promotes complete compliance.
Case: Cutter v Powell (1795) – no partial payment if work incomplete.
Problem:
Can be unfair if most of the work is done.

Mitigating the Effect of the Entire Obligations Rule

Courts recognise unfairness.
Use doctrines to soften the rule:
 Substantial performance.
 Severable contracts.
 Acceptance of partial performance.
Key Point:
Equity tempers strict common law rules.

Severable Contracts
Contracts can be divided into parts.
Payment due for completed parts even if entire contract isn’t finished.
Encourages partial performance when appropriate.
Example: Multiple deliveries under one contract.
Key Point:
Avoids all-or-nothing results.

The Acceptance of the Performance by the Other Party

If the other party accepts partial or defective performance:
May be bound to pay.
Cannot later reject if acceptance was voluntary and informed.
Payment can be adjusted.
Example: Accepting part delivery without complaint.

The Doctrine of Substantial Performance

Allows payment if performance is nearly complete with minor defects.
Case: Hoenig v Isaacs (1952) – decorator paid less cost of defects.
Balances fairness with obligation to perform.
Prevents disproportionate loss for minor failures.

Expiry of Time or Other Specific Event

Contracts may end naturally.
Fixed-term contracts expire automatically.
Conditions precedent or subsequent control duration.
Example: Lease for 5 years ends without breach.
Key Point:
Simple and predictable form of discharge.

Agreement
Parties can mutually agree to end the contract.
Can be express or implied.
May involve fresh consideration.
Called “accord and satisfaction” if settling claims.
Flexible way to avoid disputes.

Frustration
Occurs when an unforeseen event makes performance impossible or radically different.
Discharges contract automatically.
Neither party at fault.
Case: Taylor v Caldwell (1863) – music hall burned down.
Why?
Prevents injustice when contract becomes impossible through no fault.

The Legal Effect of Frustration

Discharges future obligations.
Rights accrued before frustration remain enforceable.
No damages for non-performance after frustration.
Automatic, not elective.

Identifying Frustration
Unforeseen event after contract formed.
Beyond parties’ control.
Makes performance impossible, illegal, or radically different.
Must not be due to fault or allocated risk.
Exam Tip:
Strict doctrine—applied narrowly.

Frustration When Performance Is Impossible

Physical impossibility.
Example: Venue destroyed, performer dies.
Courts examine if essential purpose is blocked.
Frustration Due to Impossibility When the Subject Matter Is Destroyed
No subject matter = no performance.
Case: Taylor v Caldwell (1863) – music hall burned down.
Key Point:
Impossibility must be total.

Frustration Due to Where a Person Is Ill or Dies

Personal service contracts frustrated if performer is incapacitated or dies.
Case: Robinson v Davison (1871) – pianist’s illness.
Recognises personal obligations cannot transfer.

Frustration Due to Where the Agreed Means of Performance Becomes Unavailable

Means essential to performance becomes unavailable.
Case: The Eugenia (1964) – closure of canal.
Alternative routes can defeat frustration claim.

Frustration When Performance Is Illegal

Change in law makes performance illegal.
Example: War, embargoes, new regulations.
Contract discharges automatically.

Frustration When the Main Purpose of Both Parties to the Contract Is Lost
Frustration of purpose.
Case: Krell v Henry (1903) – cancelled coronation.
Must show both parties shared the frustrated purpose.

Frustration and Fault

No frustration if event is party’s fault.
Self-induced frustration is not a defence.
Case: Maritime National Fish v Ocean Trawlers (1935) – allocation of licences created impossibility.

The Effect of Frustration on Financial Obligations

Law Reform (Frustrated Contracts) Act 1943 governs in UK.
Pre-payments can be recovered.
Expenses and benefits adjusted fairly.
Avoids unjust enrichment.

The Effect of Frustration on Claims for Money

Payments made before frustration can be reclaimed.
Money due but unpaid no longer payable.
Court can allow set-offs for expenses.
Example: Deposits minus supplier’s costs.

SQE1 EXAM STRATEGY:

 Identify discharge method (performance, breach, frustration, agreement).
 Classify contract terms (condition, warranty, innominate).
 Analyse breach consequences.
 Apply frustration rules carefully.
 Support answer with case-law.
REMEDIES

Introduction to Remedies
Remedies are the legal solutions courts provide to enforce rights or compensate for breaches.
They ensure that when one party breaches a contract, the innocent party is not left worse off.
The aim is to uphold the bargain and restore the injured party to the position they would have occupied had the
contract been performed.
English contract law is traditionally compensatory, not punitive—it seeks to compensate for loss, not punish the
breaching party.
Remedies can be divided broadly into two categories:
 Common law remedies (primarily damages)
 Equitable remedies (like specific performance and injunctions)

Damages
Damages are the default remedy for breach of contract in English law.
They are a court-ordered monetary sum to compensate the claimant for losses suffered due to the breach.
Unlike tort damages, they focus on fulfilling the contractual expectation.
They aim to place the claimant in the position they would have been in if the contract had been properly performed.
Example:
A supplier fails to deliver machinery on time, leading to lost production and profit—the buyer may claim damages
equivalent to that lost profit.

The Aim of Damages for Breach of Contract

The core aim of damages in contract law is compensation, not punishment.
The law seeks to uphold the promise by putting the innocent party in the same position as if the contract had been
performed.
This is known as protecting the expectation interest.
Damages can also protect the reliance interest, reimbursing expenses wasted due to the breach if expectation loss is
too uncertain.
Key Point:
Damages should not overcompensate or punish but fairly reflect the loss caused by the breach.

The Time for Calculating Damages

Damages are usually assessed at the date of breach.
This rule promotes certainty, giving parties a clear point for valuation.
However, courts can depart from this rule if strict application would be unjust.
For example, if market values fluctuate in the time between breach and trial, courts may adjust damages accordingly.
Case:
Johnson v Agnew (1980) – established that damages are typically assessed at trial if that’s necessary to do justice.

Loss of Expectation
Expectation loss is the most common measure of damages.
It represents what the claimant expected to gain from the contract.
This approach enforces the promise of the contract by giving the benefit of the bargain.
It can include lost profits, costs of cure, or difference in value.
Key Point:
The goal is to put the innocent party in the position they would have been in had the contract been properly performed.
Loss of Expectation: Loss of Profit
One major component of expectation loss is loss of profit.
This compensates for profits the claimant would have earned but for the breach.
Especially important in commercial contracts, where failure to supply goods or services can prevent profitable sales.
Claimant must prove the profit was reasonably certain and caused by the breach.
Example:
Wholesaler fails to deliver goods; retailer loses resale profit.

Loss of Expectation: Difference in Value

Damages can also measure difference in value.
This is the difference between the value of what was promised and what was actually delivered.
Common in construction or goods contracts.
Courts ask: What is the market value of what was delivered versus what was contracted for?
Example:
Building finished with cheaper materials than agreed; buyer recovers difference in value.

Loss of Expectation: Cost of Cure

Cost of cure measures how much it will cost to fix defective performance.
The claimant may recover the reasonable cost of remedying the breach.
Courts consider proportionality: if the cost is grossly disproportionate to the benefit, they may refuse it.
Case:
Ruxley Electronics v Forsyth (1996) – swimming pool built shallower than contracted. Court refused extravagant cost
to rebuild, awarded modest loss of amenity instead.

Wasted Expenditure
Wasted expenditure protects the reliance interest.
This allows the claimant to recover costs incurred in reliance on the contract that were wasted due to the breach.
Used where expectation loss is hard to prove.
The aim is to put the claimant back in the position as if the contract had never been made.
Example:
Expenses on advertising for an event the supplier cancels.

Factors That Limit a Person's Ability to Claim Damages

English law recognises several limits to avoid overcompensation or unfairness.
Key doctrines are:
 Causation – loss must be caused by breach.
 Contributory negligence – claimant’s fault may reduce damages.
 Remoteness – only foreseeable losses are recoverable.
 Mitigation – claimant must take reasonable steps to reduce loss.
These ensure damages remain fair and proportionate.

Causation
Causation requires proving the breach caused the loss claimed.
Factual causation is tested with the “but for” test: would the loss have occurred but for the breach?
Legal causation considers whether the connection is too remote or broken by intervening events.
Courts reject claims for losses not sufficiently linked to breach.
Example:
Supplier's delay leads to missed resale opportunity; must prove delay caused lost sale.
Contributory Negligence
When the claimant's own negligence contributes to their loss.
Traditionally more common in tort, but also applies in contract where relevant.
Law Reform (Contributory Negligence) Act 1945 allows courts to reduce damages proportionally.
Claimant must act reasonably to avoid adding to their loss.
Example:
Failure to inspect delivered goods promptly, allowing defects to worsen.

Remoteness
Remoteness limits liability to foreseeable losses.
Key Case:
Hadley v Baxendale (1854) – damages recoverable if:
 Arising naturally from breach.
 Reasonably contemplated by both parties at formation.
Prevents liability for highly unusual, unforeseeable losses.
Example:
Uncommunicated special needs do not create liability.

Mitigation
Claimant must take reasonable steps to reduce loss.
Cannot recover damages for avoidable losses.
Defendant must prove failure to mitigate.
Claimant is not expected to take unreasonable or risky measures.
Example:
Refusing a reasonable substitute supply offer.

Damages for Non-Financial Loss

Normally, contract damages compensate financial loss.
However, limited exceptions exist for non-financial harm.
Courts may allow damages if contract’s purpose was comfort or peace of mind.
Generally excluded in commercial settings.

Damages for Mental Distress

Damages may be awarded for mental distress if contract aimed at pleasure or comfort.
Case:
Jarvis v Swans Tours Ltd (1973) – holiday not as promised.
Not generally available in commercial contracts where emotional satisfaction is not the purpose.

Damages for Loss of Enjoyment

Closely linked to mental distress damages.
Applicable when the breach destroys the enjoyment purpose of the contract.
Typically for leisure or holiday contracts.
Commercial contracts rarely allow such claims.
Example:
Ruined vacation due to hotel’s poor service.

Damages for Loss of Reputation

Rare in contract law but possible where breach foreseeably damages reputation.
Case:
Malik v Bank of Credit and Commerce International SA (1997) – implied term of trust and confidence.
Especially relevant in employment contracts.
General rule: must show clear link between breach and reputational harm.
Liquidated Damages and Penalties
Liquidated damages = pre-agreed sum payable on breach.
Enforceable if genuine pre-estimate of loss.
Penalty clauses = unenforceable if sum is extravagant or punitive.
Courts scrutinise clauses to prevent unfair punishment.
Key Case:
Dunlop Pneumatic Tyre Co Ltd v New Garage (1915) – test for distinguishing penalties from liquidated damages.

Liquidated Damages Clause or Penalty

Courts distinguish enforceable liquidated damages from penalties.
Key question: Is the sum a genuine attempt to estimate loss or an oppressive penalty?
Labels used by parties are persuasive but not conclusive.
Focus is on proportionality.
Example:
Excessive charges for minor breach may be deemed penalty and struck down.

Guarantees and Indemnities

Contractual tools for risk allocation.
Guarantee: Secondary obligation. Surety agrees to pay if principal debtor defaults.
Indemnity: Primary obligation. Indemnifier covers losses directly.
Commercial agreements often use indemnities for broader protection.

Guarantee
A promise to answer for another's debt or default.
Usually needs to be in writing under the Statute of Frauds.
Liability is secondary—surety pays only if principal fails.
Common in lending, leasing.
Example:
Parent guaranteeing child’s rent payments.

Indemnity
A promise to cover another's losses directly.
Primary obligation—arises independently of third-party default.
Used to shift risks in commercial contracts.
Often broader than guarantees.
Example:
Supplier indemnifies buyer against third-party IP claims.

Equitable Remedies: Specific Performance and Injunctions

Available where damages are inadequate to achieve justice.
Discretionary—granted at court’s equitable discretion.
Subject to equitable defences (e.g., unclean hands, impossibility).
Focus on fairness and practicality.

Specific Performance
Court order compelling a party to perform their contractual duty.
Used where subject matter is unique (e.g., land, rare goods).
Not ordered if damages suffice or supervision is impractical.
Equity requires claimant to act fairly.
Case:
Beswick v Beswick (1968) – enforced annuity payment promised under contract.
Injunction
Court order compelling or restraining action.
Prohibitory injunction: Stops doing something (e.g., breach of negative covenant).
Mandatory injunction: Requires doing something.
Used to prevent irreparable harm or enforce negative obligations.
Example:
Preventing use of confidential information in breach of contract.

SQE1 EXAM STRATEGY:

 Identify correct remedy type.
 Analyse loss type and applicable limitation doctrines.
 Justify measure of damages with relevant case-law.
 Consider equitable relief if damages inadequate.
 distinction – Ayrım / Farklılık. Sözleşme hükümleri arasında önemli bir ayrım yapılır.
 invitation to treat – Teklife davet. İlanlar genelde invitation to treat niteliğindedir.
 termination of offer before acceptance – Kabulden önce teklifin sona ermesi.
 bilateral offer – İki taraflı teklif. Karşılıklı yükümlülükler içeren teklif.
 consignment – Konsinye / Emanet satışı. Mallar alıcıya konsinye olarak gönderilir.
 correspondence – Yazışma / Haberleşme. Taraflar arasındaki yazışmalar sözleşmenin bir parçası olabilir.
 instalments – Taksitler. Ödeme taksitler halinde yapılabilir.
 consideration – Karşılık / Bedel. Sözleşmenin bağlayıcılığı için karşılık gereklidir.
 made by deed – Senetle yapılan. Deed ile yapılan sözleşmelerde karşılık aranmaz.
 peppercorn rent – Sembolik kira. Nominal bedel göstermek için kullanılır.
 legal capacity – Hukuki ehliyet. Tarafların sözleşme yapma yeteneği.
 intention – Hukuki bağ iradesi. Tarafların bağlayıcı niyetleri olmalıdır.
 certainty – Kesinlik. Sözleşmenin şartları açık ve kesin olmalı.
 rebut the respective rebuttable presumptions – Aksi kanıtlanabilir karineleri çürütmek.
 relevant – İlgili / Alakalı. İlgili kanıtlar dikkate alınır.
 detriment – Zarar / Aleyhe durum. Karşılık olarak zarara katlanmak yeterlidir.
 comfort letters – Güvence mektupları. Bağlayıcı olmayan niyet beyanı.
 loan – Kredi / Borç. Taraflardan biri para ödünç verir.
 advertisements – İlanlar. Genelde teklife davet niteliğindedir.
 vague – Muğlak / Belirsiz. Muğlak terimler sözleşmeyi geçersiz kılabilir.
 necessaries – Zorunlu ihtiyaçlar. Minörler için geçerli satışlar.
 mental incapacity – Zihinsel ehliyetsizlik. Sözleşme yapma ehliyeti sınırlı olabilir.
 intoxication – Sarhoşluk. Ayırt etme gücünü etkileyebilir.
 offer and acceptance – Teklif ve kabul. Sözleşmenin kurulması için temel unsurlar.
 transaction – İşlem / Sözleşme. Taraflar arasında yapılan hukuki işlem.
 assignment – Temlik / Devir. Alacağın başka bir kişiye devri.
 absolute – Mutlak. Sınırsız veya şartsız anlam taşır.
 permitted under the terms of the relevant agreement – İlgili sözleşme şartlarına göre izin verilen.
 choses in action assignable – Devredilebilir alacak hakları. Alacak hakkının devri mümkündür.
 principal – Asıl borçlu / Temsil olunan kişi. Temsil ilişkisinde asıl kişi.
 limitation clause – Sorumluluğu sınırlama hükmü. Tarafların sorumluluğunu sınırlar.
 collateral contracts – Ek sözleşmeler. Ana sözleşmeye bağlı yan sözleşmeler.
 ancillary – Yardımcı / İkincil. Asıl yükümlülüğü destekleyen ek hükümler.
 sources – Kaynaklar. Hukukun dayandığı metinler veya uygulamalar.
 interpretation – Yorumlama. Sözleşmenin anlamını belirleme süreci.
 verbal – Sözlü. Yazılı olmayan beyan veya anlaşma.
 representation – Beyan / Temsil. Karşı tarafı ikna eden açıklama.
 puff – Abartılı reklam beyanı. Bağlayıcı vaat sayılmaz.
 custom – Teamül / Örf. Ticari uygulamalardan doğan hükümler.
 courts – Mahkemeler. Hukuki uyuşmazlıkları çözen organlar.
 interpret – Yorumlamak. Mahkeme sözleşme hükümlerini yorumlar.
 term – Hüküm / Şart. Sözleşmenin bağlayıcı maddesi.
 parol evidence rule – Yazılı delil kuralı. Sözlü beyanların yazılı metni değiştiremeyeceği kuralı.
 induce – İkna etmek / Sebep olmak. Karşı tarafı sözleşmeye yönlendirmek.
 representee – Beyana güvenen taraf. Yanıltıcı beyana dayanan kişi.
 inform – Bilgilendirmek. Taraflar birbirini bilgilendirmelidir.
 remedy – Hukuki çare / Çözüm. İhlal halinde sağlanan hak.
 fraudulent – Hileli / Aldatıcı. Karşı tarafı bilerek yanıltmak.
 negligent – İhmalkâr / Kusurlu. Dikkatsizlikten kaynaklanan sorumluluk.
 rescind – Feshetmek / Geçersiz kılmak. Sözleşmeyi iptal etmek
 terminate – Sona erdirmek. Sözleşmeyi yasal yollarla sonlandırmak.
 affirm – Onaylamak / Kabul etmek. Sözleşmenin geçerliliğini kabul etmek.
 duress – Zorlama / Baskı. Tarafın iradesini etkileyen yasa dışı baskı.
 undue influence – Hakkaniyete aykırı etki. Zayıf tarafa aşırı baskı uygulamak.
 officious bystander – Müdahil üçüncü kişi testi. Zımni terimleri belirlemede kullanılan test.
 business efficacy – Ticari etkinlik / İşlevsellik. Sözleşmeye zımni hüküm eklemede kullanılan test.
 plot – Arsa / Parsel. Gayrimenkul hukukunda kullanılan kavram.
 mere – Sadece / Yalın. Fazladan yükümlülük yaratmayan ifade.
 recipient – Alıcı / Bildirimi alan taraf. İhbar veya ödemeyi alan kişi.
 extrinsic evidence – Dışsal kanıt. Yazılı metin dışında delil.
 admissible – Kabul edilebilir. Mahkemede delil olarak sunulabilir.
 breach – İhlal. Sözleşmenin şartlarına uymama.
 exemption – Muafiyet / İstisna. Sorumluluğu kaldıran veya azaltan şart.
 incorporated – Dahil edilmiş. Sözleşmeye katılmış / eklenmiş.
 beads and sequins – Boncuklar ve pullar. Örnek metinlerde ürün tanımı.
 reasonable notice – Makul bildirim. Tarafa yapılması gereken uygun süreli bildirim.
 negligence – İhmal / Kusur. Dikkatsizlikten doğan sorumluluk.
 allocate – Tahsis etmek / Paylaştırmak. Masraf veya riskin taraflar arasında bölüşülmesi.
 incorporation – Dahil etme / Katma. Hükmün sözleşmeye eklenmesi.
 burden on drafter – Hazırlayanın yükü. Belirsiz ifadelerin yorum yükü.
 undermine – Zayıflatmak / Etkisiz kılmak. Bir hakkın veya savunmanın değerini azaltmak.
 unambiguous – Açık / Kesin. Yorumda belirsizlik içermeyen ifade.
 conduct – Davranış / İfa biçimi. Tarafların hareket tarzı.
 disclosure – Açıklama / İfşa. Bilgilerin karşı tarafa verilmesi.
 due diligence – Gereken özen / İnceleme. Sözleşme öncesi detaylı kontrol.
 sewer – Kanalizasyon. Taşınmaz hukukunda altyapı terimi.
 encumbrances – Ayni yükler / Kısıtlamalar. Taşınmaz üzerindeki yasal sınırlamalar.
 matrimonial – Evliliğe ilişkin. Aile hukukuna dair.
 restraint of trade – Ticaret kısıtlaması. Rekabeti sınırlayan hükümler.
 discharge of contract – Sözleşmenin sona ermesi. İfa veya anlaşmayla bitiş.
 endeavours – Çaba / Gayret. Tarafların makul gayret göstermesi.
 repudiatory breach – Temel ihlal. Sözleşmeyi sona erdirme hakkı doğuran ihlal.
 anticipatory repudiatory breach – Öngörülen temel ihlal. İfa öncesi önemli ihlal tehdidi.
 warranty – Garanti / Teminat. İhlalinde sadece tazminat hakkı veren terim.
 innominate – Sınıflandırılamayan terim. Sonuçlarına göre ihlalin ciddiyeti belirlenir.
 quantum meruit – Hak edilen bedel. Yapılan işin değerinin ödenmesi.
 envisage – Öngörmek / Tasavvur etmek. Sözleşmede olasılığı dikkate almak.
 causation – Nedensellik. Zararın ihlalden kaynaklanması.
 remoteness – Öngörülebilirlik sınırı. Tazmin edilebilir zararın sınırlanması.
 compensation – Tazminat / Karşılık. Zararın parasal karşılığı.
 incur – Katlanmak / Maruz kalmak. Gider veya yükümlülüğün üstlenilmesi.
 expenditure – Harcama / Gider. Sözleşme kapsamında yapılan masraf.
 tenant – Kiracı. Taşınmaz kiralayan kişi.
 mitigation – Zararı azaltma yükümlülüğü. Makul önlem alma zorunluluğu.
 contributory negligence – Müşterek kusur. Zarar görenin kendi kusurunun etkisi.
 vexation – Rahatsız etme / Taciz. Haksız yere dava açma gibi davranışlar.
 liquidated damages – Kararlaştırılmış tazminat. Önceden belirlenen zarar bedeli.
 legitimate – Meşru / Hukuka uygun. Geçerli ve yasal.
 indemnity – Tazminat yükümlülüğü. Başkasının zararını karşılama.
 surety – Kefil / Kefalet veren kişi. Başkasının borcunu üstlenen kişi.
 equitable – Hakkaniyete dayalı / Adil. Mahkemelerin adil çözüm sağlaması.
 injunctions – İhtiyati tedbir / Mahkeme emri. Belirli bir eylemi yapmayı veya yapmamayı emreder.
 discretion – Takdir yetkisi. Mahkemelerin uygun gördüğü şekilde karar verme yetkisi.
 tender – Teklif verme / İhale teklifi. Resmi veya bağlayıcı fiyat önerisi.
 revoke – Geri çekmek / İptal etmek. Teklifin geri alınması.
 lapse – Sürenin dolması / Geçersizlik. Teklifin belirlenen sürede kabul edilmemesi.
 subsist – Devam etmek / Geçerli olmak. Sözleşmenin yürürlükte kalması.
 assent – Rıza / Kabul. Tarafların onayı.
 variance – Farklılık / Değişiklik. Sözleşme şartlarının değişmesi.
 stipulation – Şart / Hüküm. Sözleşmenin belirli maddesi.
 provision – Düzenleme / Madde. Sözleşme içeriğindeki şart.
 schedule – Ek / Liste / Takvim. Sözleşmeye bağlı ek belgeler.
 annex – Ek belge / İlave doküman. Sözleşmeye eklenen belge.
 recipient – Alıcı / Bildirimi alan kişi. İhbar veya ödemeyi alan taraf.
 fulfil – İfa etmek / Yerine getirmek. Sözleşme yükümlülüğünü yerine getirme.
 default – Temerrüt / Borcu ifa etmeme. Süresinde yükümlülüğü yerine getirmemek.
 non-performance – İfa etmeme. Sözleşme edimini hiç yerine getirmemek.
 defective – Kusurlu / Ayıplı. Sözleşmeye uygun olmayan mal veya hizmet.
 remedy – Hukuki çare / Çözüm. İhlal durumunda sağlanan hak.
 enforce – İcra etmek / Uygulatmak. Sözleşmeyi zorla uygulatmak.
 waive – Feragat etmek. Haktan gönüllü olarak vazgeçmek.
 forbearance – Bekleme / Alacaklı hoşgörüsü. Hakkını hemen kullanmama.
 oblige – Yükümlü kılmak. Tarafı yükümlülük altına sokmak.
 diligence – Özen yükümlülüğü. Makul dikkat ve özen gösterme.
 conduct – Davranış / İfa biçimi. Tarafların sözleşmeyi yerine getirme şekli.
 ascertain – Belirlemek / Tespit etmek. Şartların veya zararların netleştirilmesi.
 compensate – Tazmin etmek. Zararın karşılanması.
 restitution – İade / Eski hale getirme. Tarafları önceki duruma döndürme.
 expectation – Beklenen menfaat. Sözleşmeden beklenen kazanç.
 reliance – Güven / Dayanma. Tarafın beyana güvenerek hareket etmesi.
 foreseeability – Öngörülebilirlik. Zararın makul şekilde tahmin edilebilir olması.
 apportion – Paylaştırmak / Bölüştürmek. Masraf veya zararların dağıtılması.
 indemnify – Tazminat ödemek / Karşılamak. Başkasının zararını üstlenmek.
 liquidated – Kararlaştırılmış / Belirli. Önceden belirlenen tazminat miktarı.
 penalty – Ceza / Cezai şart. İhlal durumunda ödenecek ceza bedeli.
 allocate – Tahsis etmek / Paylaştırmak. Masraf veya yükün bölüştürülmesi.
 expenditure – Harcama / Gider. Sözleşmeye bağlı yapılan masraf.
 clause – Madde / Hüküm. Sözleşmenin belirli bölümü.
 recital – Giriş beyanı / Ön açıklama. Sözleşmenin başlangıç kısmındaki açıklama.
 boilerplate – Standart hükümler. Tüm sözleşmelerde tekrar eden maddeler.
 construed – Yorumlanan. Mahkeme tarafından verilen anlam.
 ambiguous – Muğlak / Belirsiz. Farklı yorumlara açık ifade.
 unambiguous – Açık / Kesin. Belirsizlik içermeyen ifade.
 implied – Zımni / Örtük. Açıkça yazılmamış ama var sayılan şart.
 express – Açıkça belirtilmiş. Taraflarca yazılı veya sözlü şekilde netleştirilen.
 incorporate – Dahil etmek / Katmak. Bir şartı sözleşmeye eklemek.
 severable – Bölünebilir / Ayrılabilir. Geçersiz kısım çıkarıldığında kalan kısmın geçerli kalması.
 ancillary – Yardımcı / İkincil. Asıl hükme destek sağlayan.
 burden (on drafter) – Hazırlayanın yükü. Belirsizlik yorumunda yükün metni hazırlayana ait olması.
 assign – Temlik etmek / Devretmek. Hakların başka birine devri.
 assignor – Temlik eden. Alacağını devreden kişi.
 assignee – Temlik alan. Hakkı devralan kişi.
 novate – Novasyon yapmak. Eski borcu yeni borçla değiştirmek.
 delegate – Yetkilendirmek / Görevlendirmek. Bir başkasına görev vermek.
 beneficiary – Lehtar / Yararlanıcı. Hak elde eden kişi.
 enforceable – İcra edilebilir. Mahkeme tarafından uygulanabilir.
 collateral – Teminat / Ek sözleşme. Ana borcu güvence altına alır veya yan yükümlülük doğurur.
 agency – Acentelik / Temsil ilişkisi. Birinin başkası adına işlem yapması.
 fiduciary – Güvene dayalı / Vekil. Taraflar arasında güven ilişkisi.
 mislead – Yanıltmak. Karşı tarafı yanlış yönlendirmek.
 conceal – Gizlemek. Bilgi saklamak.
 disclose – Açıklamak / İfşa etmek. Bilgiyi karşı tarafa sunmak.
 fraudulent – Hileli / Aldatıcı. Bilerek yanlış bilgi verme.
 negligent – İhmalkar / Kusurlu. Özen yükümlülüğünü ihlal eden davranış.
 innocent – Masum / Kusursuz. Kasıt veya ihmal olmadan yapılan beyan.
 induce – İkna etmek / Sebep olmak. Karşı tarafı sözleşmeye yönlendirmek.
 rescind – Feshetmek / Geçersiz kılmak. Sözleşmeyi iptal etmek.
 affirm – Onaylamak / Kabul etmek. Sözleşmenin geçerliliğini teyit etmek.
 voidable – İptal edilebilir. Taraflardan birinin iptal hakkına tabi.
 undermine – Zayıflatmak / Etkisiz kılmak. Hakkın veya şartın gücünü azaltmak.
 unlawful – Hukuka aykırı. Kanuna veya kurallara karşı.
 contravene – İhlal etmek / Aykırı davranmak. Yasa veya sözleşmeye aykırı hareket.
 prohibit – Yasaklamak. Yapılmasını engellemek.
 void – Hükümsüz. Başlangıçtan itibaren geçersiz.
 restraint – Kısıtlama / Engelleme. Bir hakkın sınırlandırılması.
 monopolistic – Tekelci. Rekabeti kısıtlayan.
 unconscionable – Hakkaniyete aykırı / Vicdansız. Adil olmayan şartlar.
 illegality – Hukuka aykırılık. Sözleşmenin yasa dışı olması.
 statutory – Kanuni / Yasadan doğan. Kanunla belirlenmiş.
 common law – İngiliz genel hukuku. Yargı kararlarıyla gelişen hukuk sistemi.
 supervene – Sonradan ortaya çıkmak. Durumu etkileyen yeni olay.
 render – Hale getirmek / Sonuç doğurmak. Bir yükümlülüğü yerine getirmek.
 impede – Engellemek / Zorlaştırmak. İfanın önünde engel oluşturmak.
 impracticable – Uygulanamaz / İmkansız hale gelmiş. Fiilen yapılamaz duruma gelmek.
 impossibility – İmkansızlık. Edimin ifa edilemez olması.
 discharge – Sona erdirme / İfa ile son bulma. Sözleşmenin tamamlanması veya sonlanması.
 anticipate – Öngörmek / Beklemek. Gelecekteki durumu tahmin etmek.
 repudiate – Reddetmek / Sözleşmeden dönmek. Tarafın yükümlülüğü yerine getirmemesi.
 frustration – İfa imkansızlığı / Aşırı güçlük. Tarafların kontrolü dışındaki sebeple ifanın imkansızlaşması.
 extinguish – Ortadan kaldırmak / Sona erdirmek. Bir hakkı veya yükümlülüğü bitirmek.
 instrument – Hukuki belge / Enstrüman. Resmi veya yazılı belge.
 transaction – İşlem / Sözleşme. Taraflar arasında yapılan hukuki işlem.
 consideration – Karşılık / Bedel. Sözleşmenin bağlayıcılığını sağlayan değer.
 negotiation – Müzakere. Şartlar üzerinde anlaşma süreci.
 settlement – Anlaşma / Uzlaşma. Uyuşmazlığı çözmek için varılan mutabakat.
 undertaking – Taahhüt / Söz. Yapılacağına dair verilen güvence.
 representation – Beyan / Temsil. Karşı tarafı ikna eden açıklama.
 warranty – Garanti / Teminat. İhlalinde tazminat hakkı veren terim.
 guarantee – Kefalet / Garanti. Başkasının borcunu üstlenme.
 indemnity – Tazminat yükümlülüğü. Başkasının zararını karşılama.
 claim – Talep / İddia. Hak iddiası.
 loss – Kayıp / Zarar. Maddi veya manevi zarar.
 benefit – Yarar / Menfaat. Sözleşmeden sağlanan avantaj.
 obligation – Yükümlülük. Tarafların yerine getirmesi gereken edim.
 liability – Sorumluluk. Borç veya yükümlülük altına girme.
 breach – İhlal. Sözleşmeye aykırılık.
 default – Temerrüt. Süresinde ifa etmeme.
 performance – İfa. Edimin yerine getirilmesi.
 non-performance – İfa etmeme. Yükümlülüğü yerine getirmemek.
 termination – Sona erme / Fesih. Sözleşmenin bitmesi.
 expiry – Sürenin dolması. Sözleşmenin süresinin bitmesi.
 agreement – Anlaşma / Sözleşme. Taraflar arasındaki mutabakat.
 notice – Bildirim. Tarafa yapılan resmi duyuru.
 reasonable – Makul. Orta seviyede ölçülü.
 unreasonable – Makul olmayan. Aşırı veya adaletsiz.
 sufficient – Yeterli. Hukuken geçerli seviyede.
 adequate – Uygun / Yeterli miktarda. Ekonomik değer açısından yeterli.
 valid – Geçerli. Hukuken bağlayıcı.
 void – Hükümsüz. Geçerli olmayan.
 voidable – İptal edilebilir. Belirli şartlarla sona erdirilebilir.
 enforceable – İcra edilebilir. Mahkeme kararıyla uygulanabilir.
 unenforceable – İcra edilemez. Mahkemece uygulanamayan.
 binding – Bağlayıcı. Taraflar için zorunlu.
 non-binding – Bağlayıcı olmayan. Tavsiye niteliğinde.
 express – Açıkça belirtilmiş. Yazılı veya sözlü net ifade.
 implied – Zımni / Örtük. Açıkça yazılmamış ama var sayılan.
 incorporate – Dahil etmek / Katmak. Sözleşmeye hüküm eklemek.
 interpretation – Yorumlama. Hükümlerin anlamını belirlemek.
 clause – Madde / Hüküm. Sözleşmenin bölümü.
 provision – Düzenleme / Şart. Sözleşmenin içeriği.
 statute – Kanun / Mevzuat. Yasayla belirlenen kurallar.
 act – Yasa / Kanun. Parlamento tarafından çıkarılan hukuk kuralı.
 case-law – İçtihat hukuku. Mahkeme kararlarıyla oluşan hukuk.
 common law – İngiliz genel hukuku. Geleneksel mahkeme kararları.
 equity – Hakkaniyet hukuku. Adil ve vicdani çözümler sağlayan hukuk dalı.
 equitable – Hakkaniyete dayalı. Adil çözümler sunan.
 remedy – Hukuki çare / Çözüm. Hak ihlali halinde başvurulan yol.
 relief – Hukuki yardım / Tazminat. Mahkemeden istenen çözüm.
 consider – Değerlendirmek. Dikkate almak.
 negotiate – Müzakere etmek. Şartlar üzerinde görüşmek.
 agree – Anlaşmak / Kabul etmek. Tarafların uzlaşması.
 consent – Rıza göstermek / Kabul etmek. Onay vermek.
 refuse – Reddetmek. Kabul etmemek.
 reject – Geri çevirmek. Uygun bulmamak.
 accept – Kabul etmek. Onaylamak.
 intend – Niyet etmek. Amaçlamak.
 induce – İkna etmek. Karşı tarafı sözleşmeye yönlendirmek.
 assumption – Varsayım. Kabul edilen öncül.
 expectation – Beklenti. Sözleşmeden doğan menfaat.
 reliance – Güven / Dayanma. Beyana güvenerek hareket etme.
 allocate – Paylaştırmak / Tahsis etmek. Masraf veya yükümlülüğün paylaşımı.
 apportion – Bölüştürmek / Paylaştırmak. Masraf veya zararın dağıtılması.