Evaluation Sheet LLB Exam (Contract) PDF

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Offer and AcceptanceCommon Offer and Acceptance PP Question Claims- 2018 Is offer and acceptance really necessary in modern-day contracts? - 2017 There are problems with the postal acceptance rule – acceptances should only be established when received by offerorCriticisms of the mirror image approac...

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Evaluation sheet Contract

Offer and Acceptance Common Offer and Acceptance PP Question Claims -

2018 Is offer and acceptance really necessary in modern-day contracts? 2017 There are problems with the postal acceptance rule – acceptances should only be established when received by offeror

Criticisms of the mirror image approach - Unsuitability Lord Denning Alternative approach to battle of forms, Butler v Ex-Cell-O Corp - “In many of these cases our traditional analysis of offer, counteroffer, rejection, acceptance and so forth is out of date” - The better way is for courts to determine reasonable compromises on disputed terms if parties are all agreed on all material terms o (1) Commitment question: ‘have parties reached agreement on all material points, even though there may be differences between forms and conditions’ o (2) Content question: ‘if parties’ terms can be reconciled to give harmonious result, all well and good. If differences are irreconcilable, so that they are mutually contradictory, then conflicting terms may have to be scrapped and replaced by reasonable implication.’ Advantages of Lord Denning’s approach -

More flexible framework for reconciling inconsistent terms and apparent lack of consensus

Criticisms of Lord Denning’s approach -

Uncertainty Making the contract for the parties Rawlings emphasises traditional analysis should be retained for simplicity

Lord Wilberforce - “English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the market lots of offer, acceptance and consideration” Lord Diplock “Most common contracting situations do not fit easily into the normal analysis of contract being constituted by offer and acceptance” - Gibson v Manchester CC

Evaluation sheet Contract Misleading -

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Objective test of intention ‘bites’ precisely when party’s actual intention differs from apparent intention Situation-specific rules o Contradict objective test as to whether there is O&A  Displays =/= offers  Silence =/= acceptance o Courts may find agreement despite evident lack of consensus  Battle of forms Contract may be formed when parties are unaware of this o Postal acceptance o Unilateral contract

Backwards reasoning -

Judges reason they reason deductively (forwards) assessing the facts of the case for compliance with legal requirements and arriving at solution With the mechanical application of the test – failed in some cases o Chapelton v Barry

Policy considerations -

Respecting parties’ intentions Certainty Preventing unfairness o Discourage opportunism, encourage fair negotiating practices o Use of unilateral contract analysis  Carlill v Carbolic Smoke Ball Co o Unfair terms can be prevented by moving time of contract forward

Alternative approaches to O&A -

Analytically convenient Great degree of uncertainty (Especially in important commercial contracts) Well established and has the weight of authority Contract can be formed when parties are satisfied with the material terms, and leave to courts to decide on immaterial terms o Rejected

Evaluation sheet Contract

Consideration, intention, estoppel Common Consideration PP Question Claims -

2017 English law only protects the economic value of performance 2016 Law governing agreements to modify pre-existing obligations is arbitrary and confusing 2015 Only the appearance of intention matters, not so much intention itself.

Atiyah on Consideration (revisionist) -

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English contract law on consideration in need of fundamental restatement Doctrine of consideration no longer accords with law actually enforced in courts Attacks Treitel o “The fact that our most distinguished and orthodox interpreter of the modern law of contract is driven to admit that courts can ‘invent’ consideration and still remain orthodox – seems like there is something pretty strange going on.” Atiyah assumes if we use the definition of consideration as ‘the reason for the enforcement of a promise’, then the consideration doctrine is not confusing o But this is difficult to reconcile with developments post Williams v Roffey Bros  Why is acceptance of more money a good reason (consideration)?  Why is acceptance of less money not a good reason (consideration)? Nonsensical to abolish doctrine of consideration o If abolished – require courts to think of what promises to enforce all over again Enforcing gratuitous promises o Too complex to apply rules of consideration or ‘intent to create legal relations’ formula Arbitrary results are inherent if Atiyah’s consideration conception is taken o If it is up to judge to decide if there are good ‘reasons’ (consideration) for enforcing a promise, then the nature of the decision is arbitrary to an extent Consideration is not a set of absolute rules to be followed (according to Atiyah) o If we accept A’s more flexible approach to consideration, then it won’t be that conceptually confusing

Treitel on Consideration (orthodox) -

Courts can ‘invent’ consideration o This is an important factor in explaining many puzzling decisions o Critiqued by Atiyah

Future of consideration -

Consideration to operate to prevent court from giving effect to the intention of the parties

Evaluation sheet Contract -

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Consideration increasingly becoming a vitiating factor o To invalidate an existing contract o Or to give effect to a contract they believe was created based on intention to create legal relations  MWB v Rock Advertising Lord Goff, White v Jones o ‘our law of contract is widely seen as deficient in the sense that it is perceived to be hampered by the presence of an unnecessary doctrine of consideration’

Alternative doctrines to be used According to the Singapore Court of Appeal: - Promissory estoppel - Economic duress o BUT there ae also difficulties regarding those two doctrines o More practical to retain consideration in its current form alongside alternatives - Base entirely on intentions to create legal relations Consideration in relation to intention -

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If parties had intention to contract – consideration If not, no consideration o Reflected by Russell LJ’s approach in Williams v Roffey Bros  “Courts nowadays should be more ready to find [the existence of consideration] so as to reflect the intention of parties” Intention to create legal relations may subsume the doctrine of consideration

Evaluation sheet Contract

Terms Implied terms – Belize Telecom In Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, another Privy Council case, Lord Hoffmann appeared to take a rather different approach. He said that the list of five conditions set down in BP Refinery "is best regarded, not as a series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so". For Lord Hoffmann, the implication of a term is an exercise in the construction of the contract as a whole: "[it] is not an addition to the instrument. It only spells out what the instrument means". He added: "There is only one question: is that what the instrument, read as whole against the relevant background, would reasonably be understood to mean?" These dicta have been widely interpreted as diluting the requirements to be satisfied before a term will be implied. Implied terms – the law clarified In Marks and Spencer, Lord Neuberger, with whom Lord Sumption and Lord Hodge agreed, has confirmed that Lord Hoffmann’s remarks in Belize Telecom did not change the law. The traditional tests "represent a clear, consistent and principled approach", which should still be followed. The notion that a term will be implied if a reasonable reader would understand it to be implied is acceptable only if "(i) the reasonable reader is treated as reading the contract at the time it was made and (ii) he would consider the term to be so obvious as to go without saying or to be necessary for business efficacy". Lord Hoffmann’s formulation should not be interpreted as suggesting that reasonableness is a sufficient ground for the implication of a term. Lord Neuberger also emphasized that construing the express words of a contract is a different exercise from implying words which are ex hypothesi not there to be construed. He concluded that, since some interpretations given to Lord Hoffmann’s observations in Belize Telecom are wrong in law, "those observations should henceforth be treated as a characteristically inspired discussion rather than authoritative guidance on the law of implied terms". Implied terms – further guidance Lord Neuberger added six comments on the five conditions proposed in BP Refinery:

Evaluation sheet Contract (i) Reasonableness is to be judged objectively – in considering what the parties would have agreed, "one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting". (ii) Fairness and acceptability to the parties are not enough – the fact that a term appears fair or that one considers that the parties would have agreed to it if it had been suggested are necessary but not sufficient grounds for implying it. (iii) The requirement for reasonableness and equitableness will usually add nothing to the other tests – "if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable". (iv) The business efficacy and officious bystander tests are not cumulative – they can be alternatives in that only one needs to be satisfied, "though it would be a rare case where only one of those two requirements would be met". The tests in BP Refinery are otherwise to be regarded as cumulative, however. (v) The officious bystander test may not be straightforward – it is important to formulate the question to be posed by the officious bystander "with the utmost care". (vi) The test of necessity for business efficacy involves a value judgment – it is not a test of absolute necessity, because the necessity is judged by reference to business efficacy. As Lord Sumption suggested in argument, it may be more helpful to say that "a term can only be implied if, without the term, the contract would lack commercial or practical coherence". Application to the lease – no implied term Applying these principles to Marks and Spencer’s lease, the Supreme Court declined to imply a term requiring the landlord to reimburse the tenant with a sum representing the proportion of rent attributable to the period after the exercise of the break. While it would be reasonable and equitable for the landlord to reimburse such a sum, which was a windfall for the landlord, it was not necessary to require such reimbursement to give business efficacy to the contract. The tenant was not assisted by the general law on apportionability of rent, since rent is not apportionable in time at common law, and section 2 of the Apportionment Act 1870 only provides for the apportionment of rent payable in arrears, not (as here) rent payable in advance. That was

Evaluation sheet Contract generally understood to be the position when the lease – a professionally drafted document of some 70 pages – was negotiated and executed. There was an anomaly in the lease as drafted. If the tenant had paid the break premium before 25 December, then only the rent for the period from 25 December to 24 January would have been payable, since by the date on which the rent was due all the requirements for exercising the break would have been fulfilled and determination of the lease on 24 January would have been certain. Since the tenant did not in fact pay the break premium until 18 January, however, the early determination of the lease was not certain by 25 December, and so a full quarter’s rent was due on that date. Lord Neuberger described this effect as "capricious", but since it did not amount to an absurdity or make the lease unworkable, there was no justification for implying a term to the contrary. Comment – a trend in the Supreme Court This judgment reinforces a trend, evident in two other recent cases decided by the Supreme Court, for the court to respect the words used by the parties to effect the deal they have made. In Arnold v Britton and others [2015] UKSC 36, the Supreme Court declined to depart from the natural reading of a term in the lease of a holiday chalet providing that the service charge due would increase by 10% per annum, even though the result of applying such an increase was "plainly unattractive, indeed alarming" for the lessee. In Cavendish Square Holding BV v El Makdessi [2015] UKSC 67, on which we reported here, the Supreme Court upheld provisions in a contract for the sale of shares providing that the buyer would not have to make the interim and final payments due if the seller breached certain restrictive covenants, even though the value of those payments went far beyond a genuine pre-estimate of the buyer’s loss. Taken together, these cases, in all of which the leading judgment was given by Lord Neuberger, represent a move away from the more creative approach to contractual interpretation, stressing commercial reasonableness, associated with Lord Hoffmann. It is evident that the court is now returning to a more literal approach, placing greater emphasis on the actual words of the contract in question. The lesson for parties negotiating an agreement is clear: they should take care to ensure that the words used reflect their intentions explicitly, and not seek to rely on the courts to rewrite their contract according to what may be considered to be commercially reasonable. 

Evaluation sheet Contract

Evaluation sheet Contract

Duress and undue influence, and unconscionability Common PP Essay Questions - Duress and undue influence are unclear, should be subsumed within one category of unconscionable dealing/improper pressure - Misrep, duress and undue influence all involve the claimant not consenting to the contract - Duress, undue influence and unconscionability does not void a contract because there was no consent, but because of illegality of the D’s act3

Instead of causation-led approach to economic duress cases – switch to illegitimacy of pressure applied - Causation requirement stabilised at the ‘but for’ standard Base legitimacy of the threat to depend on presence or absence of good faith of party making threat McKendrick – treat all threats to breach as illegitimate pressure – would only have to be ‘a reason’ for the complainant’s consent - (1) Courts should uphold integrity of the original contract and - (2) English law does not distinguish between good faith and bad faith threats to breach o Analogous to promisee who threatens to breach existing duty cannot rely on ‘practical benefit’ as consideration – this is analogous to economic duress  South Caribbean Trading Ltd

Difficulties inherent in the ‘coercion of the will’ theory – Lord Hoffmann’s theory - Expressed by Professor Atiyah o Duress does not deprive person of all choice – merely presents him with choice between evils o What is wrong with the contract is not the absence of consent – but the wrongful nature of the threats which have been used to bring about the consent o The more the pressure, the more willing an individual would enter into a contract o Is it helpful to say that ‘will has been coerced’? o Courts have not abandoned the language of ‘compulsion of the will’  R v AG for England and Wales Lord Hoffmann - Greater emphasis placed not only on identifying the presence of consent o More emphasis on the nature of the pressure o Principal task of court is to ask “What is illegitimate pressure” Matter of consent – consent can be forced: it is helpless to judge the doctrine of duress and undue influence as lack of consent

Evaluation sheet Contract -

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Consent should only be used to establish a sufficient causal link between pressure applied by defendant and entry into the contract In Barton v Armstrong, the Privy Council held that pressure need only be a cause of the decision into the contract o This is a very low threshold – not sure if appropriate test for economic duress o Absence of consent is not enough to entitle a party to set aside the contract Lack of consent is not enough in itself to entitle a party to set aside the contract o Threshold factor which is necessary to demonstrate existence of sufficient causal link between illegitimate pressure and entry into the contract  CONTRAST THE VIEW THAT LACK OF CONSENT SHOULD BE SUFFICIENT TO SET ASIDE THE CONTRACT 

Uncertainty as to as to the test which is sufficient causal link between pressure by D and entry into the contract - Suggested in Barton v Armstrong that onus of proof shifts to D to prove that illegitimate pressure would not have influenced C - Approach does not apply in economic duress – relief given way too easily to the claimant (if C proves that it is disadvantageous) - Victim’s practical alternatives vs illegitimacy of pressure = which one is better in determining the causal link o Depends on the meaning of illegitimacy  Identify distinct categories of illegitimacy from R v AG for England and Wales Lord Hoffmann  (1) threat of any form of unlawful action  (2) lawful pressure =/= legitimate pressure  Burrows (2010) argued that ‘bad faith’ should play an important role in deciding whether or not a threatened breach of contract is illegitimate  ‘breach of contract is illegitimate if concerned to exploit the claimant’s weakness rather than solving financial or other problems of the defendants’ Reducing uncertainty regarding duress, undue influence and unconscionability -

Two types of unfairness can be recognised o (1) procedural unfairness o (2) substantive unfairness  Atiyah maintains there isn’t a distinction between the two types  Both types feed off each other

Objections against creating a single doctrine of unconscionability  Courts have hard time identifying contracts which are unfair – adversarial nature of litigation o Does not make it easy for them to set transaction which is before them in context of market which parties are operating act o Market may suggest transaction is not unfair (Trebilcock)

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Wide degree of uncertainty o This can be resolved by recognising the two types of unfairness – procedural and substantive (this has been doubted by Atiyah) English law has aversion to creating wide, broad principles Not the function of contract law to engage in redistribution of wealth Unconscionability differ from duress and undue influence o VS duress: does not require application of illegitimate pressure o VS undue influence: does not require relationship of influence between parties

Unconscionable bargain notes  Prove o Improvident transaction o Bargaining impairment o Unconscionable conduct o Absence of adequate advice

Rationale for undue influence is being in a relationship Duress – not based off relationship Birks and Chin https://www.oxfordscholarship.com/view/10.1093/acprof:oso/9780198265788.001.0001/acprof9780198265788-chapter-3  

Claimant-sided defence, looks at whether consent is impaired That duress and undue influence should be merged together

Bigwood  Wrong – Allcard v Skinner (Mother Superior did not nothing) o Undue influence is about the promisee doing something wrong/morally questionable Atiyah  Coercion of the will theory is wrong – not absence of consent. It is the way the consent was given ...