Advanced Contract LAW212 - Seminars 2019-20 (15) PDF

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Seminar One FORMATION

The purpose of this seminar is to focus on a number of specific difficulties concerning offer and acceptance.

Reading: You will be expected to read the chapters on Offer and Acceptance in your preferred textbook.

Butler Machine Tool Co v Ex-Cell-O Corpn. [1979] 1 All ER 965 or [1979] 1 WLR 401 Peter Lind & Co. V Mersey Docks and Harbour Board [1972] 2 Lloyd’s Rep 234 Thornton v Shoe Lane Parking [1971] 2 QB 163 or [1971] 1 All ER 686 or [1971] 2 WLR 585 Foley v Classique Coaches [1934] 2 KB 1 Scammell v Ouston [1941] AC 251 [1941] 1 All ER 14 Entores v Miles Far East Corporation [1955] 2 QB 327 [1955] 2 All ER 493 [1955] 3 WLR 48 Brinkibon Ltd. V Stahag Stahl [1983] 2 AC 34 [1982] 1 All ER 293 [1982] 2 WLR 264 Walford v Miles [1992] 2 AC 128 [1992] 1 All ER 453 [1992] 2 WLR 174 Miller, ‘Felthouse v Brindley Revisited’, (1972) 35 MLR 489 Rawlings, R, ‘The Battle of the Forms’, (1979) 42 MLR 715 Mitchell & Phillips, ‘The Contractual Nexus: Is reliance essential?’, (2002) 22 OJLS 115 Morgan, ‘Battle of the Forms: Restating the Orthodox, (2010) CLJ 230

1) Your client is Tony Smith. Having purchased a site for Greenacres, Tony entered into negotiations with Neil, a local builder, for the construction of a two storey residential home, designed to accommodate 50 people.

In due course, Neil sent Tony a letter, offering to carry out work for a price of £800,000 “subject to my usual terms and conditions enclosed herewith”. In fact, Neil had forgotten to enclose a copy of his usual terms and conditions, one of which provided that it was the client’s responsibility to ensure that all necessary planning permission had been obtained for the work. At once, Tony replied by letter, accepting “subject to satisfactory planning permission being obtained”. This letter was lost in the post and never reached Neil. Two weeks later, not having heard from Tony, Neil rang to ask whether Tony intended to accept. Tony was out at the time of the call, so Neil left a message on Tony’s answerphone simply saying: “Hello Tony. This is Neil “Just calling to double check that you are accepting my offer.” Tony was unsure what had prompted this call but he thought that it must be a query about his acceptance being stated to be “subject to satisfactory planning permission being obtained.” When Tony rang Neil’s office, Neil was out on site; so Tony left a message with Neil’s secretary asking her to tell Neil that, of course, he was accepting. The following day, Tony heard from the local planning authority that planning permission had been granted, but that a condition of the permission was that Tony should take steps to improve road traffic visibility and access at the main entrance to Greenacres. Tony had made no allowance for improvements of this kind (costing of the order of £50,000) in negotiating with Neil. Outlining which further facts (if any) you would need to know, advise Tony whether he is contractually bound to Neil and, if so, on which terms the contract has been made.

2) Consider how you might respond to the following ‘Whilst the courts will look to identify the essential elements of a contract in any case which is before them, it may be suggested that at times they are more concerned with the more practical problem of deciding in the course of litigation whether a particular promise, in a particular case should be enforced’ Critically discuss

Seminar 2 VARIATION OF TERMS

The purpose of this seminar is to consider those circumstances where the parties may enter further discussion of the terms of contract, leading to renegotiation of their obligations under the contract. This raises issues of consideration, and in some circumstances duress, and estoppel. It is important to understand the expectations of the law in relation to contractual variation, but this is also an interesting area for wider discussions, and one that turns a focus on the wider role of consideration.

Reading: You will be expected to read the chapters on Variation of Contractual Terms in your preferred textbook.

There is an interesting account of the development of the High Trees principle in Denning, The Discipline of Law, pp 197-223. Stilk v Myrick (1809) 170 ER 1168 Williams v Roffey Bros & Nicholls [1991] 1QB 1; [1990] 1 All ER 512 Collier v Wright [2007] EWCA Civ 1329 Re Selectmove Ltd. [1995] 2 All ER 531; [1995] 1 WLR 474 Central London Property Trust v High Trees House [1947] 1 KB 130, WLR 188 Baird Textiles Holdings Ltd. V Marks and Spencer plc [2001] EWCA Civ 274, [2002] 1 All ER (Comm) 737 North Ocean Shipping v Hyundai Construction: The Atlantic Baron [1979] QB 705 Pao On v Liu Yau Long [1980] AC 614; [1979] 3 All ER 65; [1979] 3 WLR 435 Compagnie Noga D’Impotation et d’Exportation SA v Abacha [2003] EWCA Civ 1100, [2003] 2 All ER (Comm) 915

O’Sullivan, J, ‘In Defence of Foakes v Beer’ [1996] CLJ 219-28 Austen-Baker, ‘A strange sort of survival for Pinnel’s case: Collier v P & M J Wright (Holdings) Ltd (2008) 71 (4) MLR 611 Giancaspro, ‘Practical Benefit: An English anomaly or a growing force in contract law?’ (2013) 30 JCL 12

In addition, there are several case-notes on the important case of Williams v Roffey Bros & Nicholls which you may find useful.

1) Your client is Tony Smith Tony has contracted with Neil for the construction of Greenacres for a fixed sum of £800,000. Neil has subcontracted the electrical work to his brother-in-law Jim. Originally, Jim quoted a price of £35,000 for the electrical work but “in order to help out Neil”, he agreed to do the job for a fixed price of £30,000. Before contracting with Neil, Tony obtained several estimates all of which (apart from Neil’s) were well over £1 million. As the construction work proceeds, it becomes apparent that Neil has under-priced the contract. At a crisis meeting, Neil presents Tony with two options: either to use lower grade materials or to increase the price by £50,000. Tony is reluctant to incorporate cheaper materials and so he agrees to pay Neil an additional £50,000. Work continues, but when Jim discovers that Tony has promised Neil an additional £50,000, Jim demands that Neil should increase the sub-contract price by £5,000 to bring it into line with the price originally quoted for the work. Neil tells Jim that, whilst he would like to do this, he simply cannot afford to do so. However, Neil tells Tony that there is a difficulty with Jim’s sub-contract and that it is in his (Tony’s) interest to promise Jim a bonus of £5,000 if he wants the electrical work to be completed on time. After some hesitation, Tony tells Jim that there will be a bonus of £5,000 for timely completion of the sub-contract work. When the work at Greenacres has been completed, the final accounts for payment (including the promised additional sums) are submitted. Outlining which further facts (if any) you would need to know, advise Tony (i) whether he is contractually bound by his promise to pay an additional sum of £50,000 to Neil; and (ii) whether he has any contractual liability to Jim (the sub-contractor electrician) to pay the promised bonus of £5,000.

2) Consider how you might respond to the following Promissory estoppel is now a mature doctrine. Its role is to mitigate some of the harshness of the doctrine of consideration by protecting those who reasonably rely on promises. Its full potential, however, can only be reached if the courts relax the restrictive rules that have shackled its development. Critically discuss

Seminar three EXEMPTION CLAUSES AND THE EXCLUSION OF LIABILITY

The purpose of this seminar is to consider the effectiveness of clauses which purport to exclude or restrict various kinds of liability.

Reading: You will be expected to read the chapters on Exclusion of Liability in your preferred textbook. Olley v Marlborobugh Court Hotel [1949] 1 KB 532, [1949] 1 All ER 127 Interfoto Picture Library Ltd. v Stiletto Visual Programmes Ltd. [1989] QB 433, [1988] 1 All ER 348, [1988] 2 WLR 615 Geo Mitchell (Chesterhall) Ltd. v Finney Lock Seeds [1983] 2 AC 803, [1983] 2 ER 737, [1983] 3 WLR 163 Stewart Gill v Horation Myer Ltd. [1992] QB 600, [1992] 2 All ER 257, [1992] 2 WLR 721 Canada Steamship Lines v The King [1952] AC 192 White v John Warwick [1953] 2 All ER 1021, [1953] 1 WLR 1285 Hollier v Rambler Motors Ltd. [1972] 2 QB 1 All ER 399, [1972] 2 WLR 40 Watford Electronics Ltd. v Sanderson CFL Ltd. [2001] EWCA CIV 317, [2001] 1 All ER (Comm) 696 Director of Fair Trading v First National Bank [2001] UKHL 52, [2001] 2 All ER (Comm) 1000, [2002] 1 All ER 97 Office of Fair Trading and Abbey National plc [2009] UKSC 6, [2010] 1 AC 696 Unfair Contract Terms Act 1977 Consumer Rights Act 2015 Adams and Brownsword, ‘The Unfair Contract Terms Act: A Decade of Discretion’ (1988) 104 LQR 94 Barendt, ‘Exclusion clauses: Incorporation and Interpretation (1972) 35 MLR 644 Mitchell, ‘Unfair terms in consumer contracts’ (2000) LQR 557

1) Your client is Tony Smith.

Tony has contracted with Neil for the construction of Greenmeadows. After a number of legal wrangles arising from their earlier contract for the construction of Greenacres, Tony and Neil decide simply to shake hands on the deal for Greenmeadows. The day after they have shaken hands on the deal, Neil sends Tony a written aide memoire summarising the principal heads of agreement and stating that the contract is subject to Neil’s usual terms and conditions. One of Neil’s standard terms and conditions provides: “The contractor accepts no responsibility for any loss or damage whatever or howsoever occasioned nor for the negligence of any other party to the building project.” During the work, Neil has occasion to use a JCB machine that he has hired for the contract from Clement. Tony is on site to discuss the project when, as a result of the joint carelessness of Neil and Clement (who is operating the JCB), the JCB collides with Tony’s car. The car is damaged and Tony suffers a broken leg. Tony wants to know whether the exclusion clause in Neil’s standard terms is part of the contract and, if so, whether it will defeat his claim for compensation against Neil and Clement.

2) Consider how you might respond to the following Whilst it is generally considered that a contract is an agreement arrived at by the parties, and thereafter freely entered into, the approach of the courts and legislature, in relation to the question of exclusion clauses, suggests that in reality that freedom exists only within certain parameters. Critically discuss.

Seminar four MISTAKE AND MISREPRESENTATION

Reading: You will be expected to read the chapters on Mistake and Misrepresentation in your preferred textbook. Dimmock v Hallett (1866) LR 2 Ch App 21 Edgington v Fitzmaurice (1885) 29 Ch D 459 Derry v Peek (1889) 14 App Cas 337 Nocton v Lord Ashburton [1914] AC 932 Bissett v Wilkinson [1927] AC 177 Esso Petroleum v Mardon [1976] QB 801 Spice Girls Ltd. v Aprilla World Service BV [2002] EWCA Civ 15 Bell v Lever Bros [1932] AC 161 Leaf International Galleries [1950] 2 KB 86 Long v Lloyd [1958] 2 All ER 402, [1958] 1 WLR 753, CA Solle v Butcher [1950] 1 KB 671 Amalgamated Investments v John Walker [1977] 1 WLR 164 With v O’Flanagan [1936] Ch 575 Smith v Land and House Property Corp (1884) LR 28 ChD7 Redgrave v Hurd (1881) LR 20 ChD1 Smith v New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 East v Maurer [1991] 1 WLR 461 The Misrepresentation Act 1967

Atiyah & Treitel, ‘Misrepresentation Act 1967’ (1976) 30 MLR 369 Beale, ‘Points on Misrepresentation’, (1995) LQR 111 Hooley, ‘Damages and the Misrepresentation Act 1967’ (1991) 107 LQR 547 Cartwright, ‘Solle v Butcher and the doctrine of Mistake in Contract’, (1987) LQR 103

1) In order to perform his contract with Tony, Neil needed to buy a new excavator. He contacted Plantco plc who sent their sales representative Wendy to negotiate.

Wendy stated, “I believe our machine is capable of lifting 1,000kg”, Wendy also stated that it was the type of machine that would be operated by a driver without special training and gave Neil a copy of Plantco’s sales brochure. Two months later, Neil entered into a written contract to buy the excavator and the price was paid. The written contract made no reference to the statement made by Wendy during the course of negotiations. On delivery Neil had the excavator painted, with his business name, and contact details written on the side, and had the cab rails removed in order to make the excavator fit on his towing trailer. He then discovered that although the excavator could lift 1000kg if fitted with a special lifting arm, under normal conditions it would lift only 700kg. If Neil had consulted the brochure that Wendy handed to him during negotiations, he would have discovered this. He also discovered that, although when Wendy told him that the excavator could be operated by a driver without special qualifications, that was indeed the case, new safety regulations were introduced a few weeks later, following a series of well publicised accidents, which require that the excavator be operated by a driver with a special government licence. Advise Neil

2) Consider how you might respond to the following By their overreliance on the ‘fiction of fraud’, the Court of Appeal has created an artificial distinction between damages for negligent misstatement in tort and damages under S 2(1) of the Misrepresentation Act 1967 for negligent misrepresentation. Critically discuss.

Seminar five IMPLIED TERMS AND FRUSTRATION

The purpose of this seminar is to consider how the law deals with matters for which no express provision has been made (this is the field of implied terms). Where the matter in question was simply not foreseen, nor perhaps even foreseeable, the doctrine of frustration may come into play.

Reading: You will be expected to read the chapters on Implied Terms and Frustration in your preferred textbook.

Taylor v Caldwell (1863) 3 B&S 826 Davis Contractors v Fareham UDC [1956] AC 696; [1956] 2 All ER 145 Krell v Henry [1903] 2 KB 740 Herne Bay Steamboat v Hutton [1903] 2 KB 683 Shirlaw v Southern Foundries [1939] 2 KB 206; [1939] 2 All ER 113 Liverpool City Council v Irwin [1977] AC 239; [1976] 2 All ER 39 Scally v Southern Health and Social Services Board [1992] 1 AC 294 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha [1962] 2 QB 26 The Eugenia, Ocean Tramp Tankers Corporation v V/O Sovfracht [1964] 2 QB 226 Fibrosa SA v Fairbairn Lawson Combe Barber Ltd [1943] AC 32 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 Att. General of Belize v Belize Telecom Ltd [2009] UKPC 10 Dear v Jackson [2013] EWCA Civ 89

Swanton, ‘The Concept of Self Induced Frustration’ (1990) 2 JCL 206 Clark, ‘Frustration, Restitution and the Law Reform (Frustrated Contracts) Act 1943’, [1996] LMCLQ 170 McKendrick, ‘The Construction of Force Majeure Clauses and Self Induced Frustration [1990] LMCLQ 153 Kramer, Implication in Fact as an Instance of Contractual Interpretation, [2004] CLJ 384 McCaughran, Implied Terms: The Journey of the Man on the Clapham Omnibus’ [2011] CLJ 607

1) Your client is Tony Smith.

Tony contracted with Neil for the construction of Greenacres for a fixed sum of £800,000. The work is completed on time but Tony is dissatisfied with two aspects of Neil’s work. First, many of the bathroom fitments are unsuitable for elderly people who have problems with gripping and turning taps and the like. The contract made no express provision for the type of bathroom fitments to be used. Secondly, the contract expressly specified that a number of gently sloping pathways should be landscaped into the gardens at Greenacres such that at all points, the gradients on the pathways would be suitable for wheelchair use. While carrying out the construction work, Neil encountered some particularly hard areas of rock. Not having suitable equipment for cutting through such rock, Neil simply built the pathways as best he could. In the result, some sections of the pathways are quite steep and unsuitable for wheelchair access. Outlining which further facts (if any) you would need to know, advise Tony (i) whether the law on implied terms might assist his claim against Neil in relation to the bathroom fitments and (ii) whether Neil might be excused by the doctrine of frustration from building the pathways as per the specification.

2) Consider how you might respond to the following “It has frequently been said that the doctrine of frustration only applies when the new situation is ‘unforeseen’ or ‘unexpected’ or ‘uncontemplated’, as if that were an essential feature. But it is not so. It is not so much that it is ‘unexpected’, but rather that the parties have made no provision for it in their contract.” Lord Denning MR, The Eugenia [1964] 2 QB 226 at 239 Critically discuss

Seminar six BREACH AND REMEDIES

Reading: You will be expected to read the chapters on Breach and Remedies in your preferred textbook.

Poussard v Spiers (1876) 1 QBD 401 Bettini v Gye (1876) LR 1 White and Carter Ltd v McGregor (1962) AC 413 Schuler v Wickman [1974] AC 235; [1973] 2 All ER 39;(Lords Reid and Wilberforce) Hong Kong Fir v Kawasaki Kisen Kaisha [1962] 2 QB 26 (Diplock LJ) The Hansa Nord [1976] QB 44; [1975] 3 All ER 739; [1975] 3 WLR 447 Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 Jarvis v Swan’s Tours [1973] 1 QB 233; [1973 1 All ER 71 Hadley v Baxendale (1854) 9 Ex 341 (Ex Ct), also on westlaw Jackson v Royal Bank of Scotland [2005] UKHL 3; [2005] 2 All ER 71 The Heron II [1969] 1 AC 350; [1967] 3 All ER 686 Farley v Skinner [2001] UKHL 49; [2001] 4 All ER 801 A-B v Blake [1998] Ch 439; [1998] 1 All ER 833 Golden Strait Corp. V Nippon Yusen Kubishika Kaisha, The Golden Victory [2005] UKHL 12; [2007] 2 WLR 691

Treitel, (2007) 123 LQR 9 Bojczuk,’When is a condition not a condition?’ [1987] JBL 353 Webb, ‘Performance and Compensation: An Analysis of Contract Damages and Contract Obligations (2006), 26 OJLS 41 Coote, ‘Breach, anticipatory breach, or the breach anticipated’, (2007) 123 LQR 503

1) Your client is Tony Smith. The problem about the bathroom fitments at Green acres has been settled and Neil has agreed to compensate Tony for the problem with the pathways. However, there is a dispute about the level of compensation to be paid in relation to the pathways. On the one side, Tony claims that he should be paid the cost of making the pathways safe (which , it is agreed, is £25,000); on the other side, Neil claims that compensation should be based on the reduced value of Greenacres (which it is agreed, is no more that £1,000). Tony is keen to resolve this outstanding problem with Greenacres and get on with the Greenmeadows project.

The Greenmeadows contract provides that the work should be completed by June 1, 2010; that Tony should give Neil possession of the site as soon as reasonably practicable; and that it is a condition of the agreement that Neil should make “diligent and reasonable progress with the work.” Tony has insisted upon this last provision, not only because he is keen for Greenmeadows to be built on time, but also because he knows that Neil has a tendency to take on too much work and spread his labour too thinly. Tony wants to know (i) whether (in relation to the dispute about the paths at Greenacres) the courts award damages on a cost of cure or difference in value basis, (ii) whether he would be in breach of the Greenmeadows contract if he did not give Neil possession until the dispute about the paths a Greenacres had been satisfactorily resolved, (iii) how damages would be calculated if he did not give Neil possession of the Greenmeadows site as soon as reasonably practicable, and (iv) whether he could withdraw from the Greenmeadows contract if Neil was in breach of the term requiring “diligent and reasonable progress with the work”.

2) Consider how you might respond to the following The Eng...