Business Law Exam Ans Template, how to answer exam questions PDF

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Contract – Elements Which Form a Contract

What was the Offer? In order for an offer to be effective, it must be communicated to the offeree- In this case, the offeror, _____name_____, made the offer of ____the offer_____. It was communicated from the offeror to the offeree, ___name___, by means of ___communication mode ___. (is it a Unilateral contract? If so quote Carlill v Carbolic Smoke Ball Co. (1892))

Establishing Acceptance

Acceptance is defined as an unconditional expression of assent to the terms of the offer. ▪

What were the terms of the contract?

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Prove that the offeree was aware of the offer (knowledge of offer) and had the desire to accept the offer.

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If the offeree was prompted to act for other reasons, offer is still valid because of William v Carwardine (1833).

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How was the acceptance communicated to the offeror? If written ฀ physically received by the offeror. If orally ฀ heard by the offeree.

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Was there unconditional expression of assent to the terms of the contract? If so, it constitutes as an acceptance.

The general receipt rule is that acceptance must be actually received by the offeror. One exception is the use of postal rule where acceptance is effective as soon as the letter is posted– Adams v Lindsell. It applies only if the parties agreed that acceptance should be sent by post and if the letter was properly stamped and addressed.

In this case, postal rule does/does not apply, acceptance is deemed effective on receipt/when the letter is posted on date.

A revocation of an offer is only effective when it has been communicated to the offeree before acceptance of the offer- Byrne v Van Tienhoven

Contract – Elements Which Form a Contract Establishing Consideration 1. What is the promise? 2. Identify promisor & promisee? 3. Apply the two rules a. Consideration must move from promisee but need not move to promisor. Has promisee provided consideration? Is there something given by the promisee. b. Must be sufficient but need not be adequate.

The promisor,

name , promises to state consideration, to _name_, the promisee if promise

name: state consideration by promise. Generally, for a promisee to enforce the promise, it must be shown that consideration has moved from him- Tweedle v Atkinson. In this case, consideration has moved from the promisee as _promisee name_ promises to _state consideration.

Next, consideration must be sufficient but need not be adequate. Sufficient consideration is described as good or valuable consideration. There are situations where consideration provided is insufficient. If: it is a past consideration, argue if it is or it is not an executed consideration. there is no consideration, check for validity of Promissory Estoppel (notes).

Privity The general rule is that no one, other than a person who is a party to the contract, may be entitled to be bound by the terms of the contract- Price v Easton. However, the Contract (Rights of Third Parties) Act (CRTA) states that a third party is able to enforce the contract which he is not a party where: (page 108)

Was There an Intention to Create Legal Relations? In determining whether the promisor has an intention to create legal relations, an objective test should be applied- Chwee Kin Keong v Digilandmall.com. The test is whether a reasonable person looking at circumstances of the case would consider that the promisor intended his promise to have legal consequences.

Under commercial agreements, there is a rebuttable presumption of intention. Under social/domestic agreements, there is a rebuttable presumption of NO intention.

Contract – Terms

1. Identify the statement 2. Is it a term or a representation? 3. What is the breach?

The statement in question would be statement made and the first issue is whether the term is a term or a representation. A term is a statement that forms part of the contract while a representation does not (oral statements not included in the written contract are representations-Parole evidence rule).

Using an objective test, whether one or both contracting parties intended that there be contractual duty will determine whether the statement is a term or a presentation. Discuss points below: Representation or Term? Terms as established when,

- The statement is made at a close time to the contract - The maker’s emphasis is greater. Bannerman v White (1861) - The maker of the statement has greater knowledge concerning the statement as compared to the other party. Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965) - The statement was NOT invited to be verified - The statement was reduced from oral to written form

For an Express Term: 1. This term is express because it was expressly agreed between X and Y in oral/written form. (If there is BOTH oral and written present) According to the parol evidence rule, when the terms are reduced to writing, what was orally agreed upon cannot be used as evidence and thus… … … 2. I’d classify this express term as a condition/warranty/innominate term because...... (notes) 3. Was this term breached? If so, how was it breached? 4. For the breach of this term, what rights does the breach give the injured party?

For an Implied Term:

This term, _____state the term_____, can be implied into the contract because it will give the contract efficacy. This is because… (custom & usage / business efficacy / statute). Next, I would classify this implied term as a condition/warranty/innominate term. (back to above)

Defendant’s name basis for claim would be the breach of an express/implied term that state term as what is the breach?

Under RDC v Sato Kogyo, there is no automatic legal right to terminate the contract in the event of a breach. In this case, the contract does/does not clearly and unambiguously provide for events pursuant to which the innocent party (name) is entitled to terminate the contract. And renunciation is/is not applicable since there is/is no clear indication of the intention to renunciate by the defendant. Next in order to give effect to the intention of the contracting parties, the condition/warranty approach is taken first.

The next issue is whether the term is a condition or not. A condition is fundamental and important to the contract such that a breach would go to the root of the contract. Apply. The plaintiff’s intention for that term to be an important part of the contract was clear, defendant has the right to terminate the contract and to claim damages.

If term is not a condition, the Hongkong Fir approach should be applied. If the consequences of the breach deprives the innocent party of substantially the whole benefit that was intended from the contract, the innocent party would have the right to terminate the contract. In this case, the breach does/does not substantially deprive plaintiff of the whole benefit as he would not/still be able to benefit. The serious/trivial consequences would allow plaintiff to terminate the contract and to claim damages/claim damages only.

Establishing an Exemption Clause 1. What are the claims? 2. Establish basis for claim, is there a breach? 3. What are the ECs? 4. Discuss all four condition

The plaintiff is trying to sue the defendant to claim for the losses as a result of a breach in contract state the breach. An exemption clause lies in the contract state where and what it exempts. The issue would be the validity of the exemption clause such that defendant would be able to rely on it to exempt himself from liability. Four condition need to be established for the exemption clause to be valid.

Firstly, the clause must be incorporated by signature or by reasonably sufficient notice. Exemption clauses may form part of a standard form written contract and if signed by the parties, they are incorporated in the absence of fraud or misrepresentation- L’Estrange v Graucob. In this case, apply.

If no written contract containing the exemption clause was signed, the issue would be whether there was reasonably sufficient notice. It is likely to be sufficient if: it is found at a place where a reasonable person would have expected to find contractual terms- Chapelton v Barry/notice was given before or at the time the contract was made- Olley v Malborough/reasonable steps were taken to bring the notice to the attention of the injured party- Thorton v Shoe Lane Parking/ there were previous course of dealings between the parties- Henry Kendall v William Lillico. APPLY. Thus, the exemption clause is/is not incorporated.

Secondly, on construction of the exemption clause, the issue is whether the clause covers the loss in question. In this case, since the clause states that defendant would not be details of the clause. The clause does/does not cover the loss in question as explain. Do the two rules apply?

Thirdly, there are no unusual factors such as misrepresentation or collateral contracts that would limit the effectiveness of the exemption clause. IF THERE ARE: An oral undertaking made before or when a written contract has been signed may overshadow the written terms, thus neutralising the exemption clause in the written document. Evans (J) &

Son (Portsmouth) Ltd v Andrea Merzario Ltd. In this case, the plaintiff orally assured defendant.

Lastly, the clause must not contravene the Unfair Contract Terms Act (UCTA). S1(3)- provisions of the act applies in cases of business liability.S2(1) states that liability for negligence in relation to personal injury or death cannot be excluded. S2(2) states that liability for other loss or damage such as financial loss or property damage, can be excluded if the clause is reasonable. S3 where one party deals as consumer or on the other’s written standard terms of business, then the clause must be reasonable if it is to be valid. S11(1) provides the test of reasonableness; term must be fair and reasonable in view of circumstances, which were known or contemplated by the parties at the time of making the contract. Drawing guidance from the Second Schedule.. Thus, the clause contravenes/does not contravene the UCTA, the exemption clause is not valid/valid.

Thus, the exemption clause is valid/not valid in exempting plaintiff from liability from loss.

Misrepresentation

The issue is whether there was actionable misrepresentation. An actionable misrepresentation is a false statement of fact made by one party (representor) to another (representee), which induces and is replied upon by the representee to alter his position, resulting in losses by the representee. In this case, representor made the representation that false statement which induced representee to alter his position and suffered loss by entering into the contract. Thus, misrepresentation is/is not actionable.

The next issue would be to determine the type of misrepresentation. Fraudulent misrepresentation arises when the false representation is made knowingly, or without belief in its truth, or recklessly, careless as to whether it is true or false- Derry v Peek. Negligent misrepresentation arises when the representor makes a false statement without due care. Representor would be liable unless he can prove that he has reasonable grounds to believe the statement to be true- Howard Marine v A Ogden & Sons. Innocent misrepresentation arises when the representor makes the false statement believing and having reasonable grounds to believe in its truth- Redgrave v Hurd. In this case, since representor/defendant JUSTIFICATION, the statement is a fraudulent/negligent/innocent misrepresentation.

This gives the representee/plaintiff the right to: rescind the contract and to claim damages under common law/rescind the contract (or damages in lieu) and to claim damages under S2(1) of the misrepresentation act/rescind the contract (or damages in lieu S2(2)). The contract is voidable until terminated by the representee. Ringo can give notice by expressing his intention not to be bound by the contract and once terminated by rescission, the contract is considered void ab initio.

*any bars to recission?

Contract – Discharge

1. Who is asking for what? 2. Service provider: argue for PERFORMANCE 3. Party paying money: argue for BREACH

The following contract can be discharged in the ways of Performance / Breach / Agreement / Frustration.

Discharging by Performance For a contract to be discharged by performance, the general rule is that the parties must perform their obligations fully and precisely- Cutter v Powell. In this case, since service provider, did not perform their obligations fully and precisely since explanation, they would not be able to discharge the contract.

However there are exception to the rule of full and precise performance which are De minimis rule, divisible contracts, substantial performance prevented performance and acceptance of partial performance. Explain the ones that are relevant:

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Is large is the deviation in performance? If it is small and microscopic, the contract can be deemed to have been performed fully and precisely under the de minimis rule.

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Can the contract be viewed as several independent obligations? (e.g. employment contracts) If so, divide the contract accordingly under the law for divisible contracts.

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What type of contract is this, divisible or entire, and why? According to the case, is there/is there not substantial performance (refer to the degree of completion)? If so, the promisor, ___name___, can claim the agreed payment less the amount necessary to make good the defect. Boone v Eyre (1779) and Hoenig v Isaacs (1952)

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Had the other party prevented the promisor from fulfilling his obligations? If so, the promisor can claim payment to commensurate with the obligations performed on the basis of quantum meruit. Planche v Colburn (1831)

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Had the promisee voluntarily accepted the partial performance of the promisor, the promisor can file for a plea of entitlement for reasonable remuneration under the law of restitution.

The contract can/cannot be discharged by performance.

Contract – Discharged (continued) Discharging by Breach This is an actual breach because it arose when the time of performance for the obligation arrived and the promisor failed to perform it. This is an anticipatory breach because even though the time for performance has yet to arrive, the promisor, by words/ conduct … … …, has clearly expressed his intention not to perform the obligation or indicated an inability in performing its obligation. ▪

How was the repudiation unequivocal (clear)? If the promisor had an underlying willingness to correct his understanding and fulfil his obligations, there is NO repudiation. Quote the case Mersey Steel and Iron Co v Naylor Benson and Co (1884).

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Did the breach result in a party being deprived of substantially the whole benefit of the contract? If so, it is a fundamental breach which can amount to a repudiatory breach according to the case of RDC concrete and Hong Kong Fir Shipping Co Ltd v Kawasaki Kaisen Kaisha Ltd.

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Breach of condition = Direct repudiatory breach

Even if the contract was breached, did the promisee choose to affirm the contract or accept the repudiation of the promisor? The innocent party must have communicated to the guilty party on his choice, so establish communication.

Affirm:

Contract remains on foot and damages can be claimed such that the promisee would be in a position as if the contract had been performed properly.

Accept:

Discontinuation of contract and all future obligations. Damages to be claimed as per above.

Discharging by Agreement 1. Was there a termination clause or term in the contract indicating the discharge of a contract with the occurrence of an event or at the expiration of a certain period? If so, it is an existing agreement. 2. Subsequent agreements (refer to notes)

Discharging by Frustration

The contract was frustrated by the supervening event, ____state the event____, and it was neither the fault of the plaintiff nor the fault of the defendant. This resulted in the very basis of the contract being destroyed and led to a radical change in circumstance (explain the change) which is different from what was originally contemplated. Justification. Thus, the situation is/is not radically different from that originally contemplated.

Supervening Event: - Destruction of subject matter (refer to notes)

- Non-occurrence of event - Government interference - Personal incapacity (e.g. sickness)

Limitations ▪

If an event is foreseeable, it is unlikely that it can be held to frustrate a contract.

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Was the frustrating event a result of voluntary actions by one of the parties? If so, it is established as self-induced frustration. Maritime National Fish v Ocean Trawlers (1935)

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Force Majeure Clauses. (refer to notes)

Effects: Since we have established that there is frustration, it can be concluded that the contract is discharged automatically as discharge by frustration is effective immediately and requires no communication or advice from one party to the other.

Contract – Remedies

The breach of the term/contract in this case occurred when _____state the scenario_____. This breach resulted in the damages/losses to be suffered by the innocent party. The damages and losses are as follows: ___list the damages___ (classify each damage / loss as an Expectation loss or a Reliance loss). Claiming for these damages would place the innocent party, so far as money can do it, in the same position he would be in if the contract had been performed.

Since there are no liquidated damages clause in the contract that specifies the amount of damages to be paid by the defaulting party to the injured party, plaintiff would be claiming for unliquidated damages. Liquidated Damages and Penalties The liquidated damage clause was/was not a genuine pre-estimate of loss in this case because ___give your justification___, therefore it is enforceable/unenforceable (respectively). Refer to guidelines in Dunlop Pneumatic Tyres Co Ltd v Motor Co Ltd (pg 222)

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If it is a genuine pre-estimate of loss, be it whether or not the actual loss is higher or lower than the estimate, the liquidated clause will be enforceable.

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If it is a penalty imposed in terrorem, the LDC will not hold and only the actual losses will be claimable.

Firstly, in assessment of damages, the issue would be identifying the type of losses suffered by the plaintiff. Expectation loss refers to loss of profits while reliance loss refers to wasted expenditure- Anglia Television v Reed. In general, the injured party cannot recover for both reliance and expectation losses should they overlap. However, injured party may claim damages for both losses as long as the expectation loss is calculated as a net figure exclusive of expenses. In this case, plaintiff suffered the following reliance losses: list. Plaintiff also suffered these expectation losses: list. Since there is no overlap of expectation and reliance loss, plaintiff can claim both losses. Plaintiff also suffer non-pecuniary losses as explain. Generally, non-pecuniary losses are not recoverable.

Establishing Causation Next, for causation, the loss must have been caused by the breach in order for damages to flowIrawan v Ong Soon Kiat. Using the But For test, it can be seen that the plaintiff would not