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REVISION MANUAL 2013-2014
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Contents
1. Contract Law .............................................................................................................................................................. 1
1.1 Agreement and Intention to Create Legal Relations .............................................................................................................................. 1
1.2 Consideration, Promissory Estoppel and Duress................................................................................................................................... 7
1.3 Terms and Exemption Clauses ............................................................................................................................................................ 10
1.4 Mistake ................................................................................................................................................................................................ 18
1.5 Misrepresentation ................................................................................................................................................................................ 20
1.6 Privity of Contract ................................................................................................................................................................................ 25
1.7 Discharge, Breach and Frustration ...................................................................................................................................................... 27
1.8 Remedies............................................................................................................................................................................................. 32
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1
2
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Phrases such as e.g. 1,000 or nearest offer, a price to be determined or a car for sale are not sufficiently clear and certain
Tentative phrases are uncertain e.g. the wording will (Storer) was held to be sufficient to meet the clear and certain requirement, whereas may (Gibson) was not
E.g. brochures and price lists
The unilateral offer must be sufficiently certain and show an intention to be bound. Note the distinction between bilateral and unilateral contracts: in a bilateral
contract, both parties make promises; in a unilateral contract, only one party makes a promise. There are two aspects to a unilateral offer: (i) an express offer to
reward performance of the prescribed act and (ii) an implied offer not to revoke the offer once the offeree commences performance
5
C.f. Lefkowitz v Great Minneapolis Surplus Store: in order to accept the offer, the offeree had to be the first to arrive with $1
6
Even if the shop actually expressly designates that the goods are on offer (Fisher v Bell)
7
Not when placed in a shopping basket (for instance). N.b. the exact point when the offer is accepted is unclear. It has been suggested that it occurs when the items
are scanned into the till. However, it does not occur when the cash is accepted payment is merely fulfilment of the contract
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3) Auctions
- General Rule: An auctioneers request for bids represents an invitation to treat. An offer is made when the bidder
places a bid, which the auctioneer is free to reject or accept. Acceptance occurs at the fall of the auctioneers
hammer. An offer can be withdrawn at any time before acceptance (Payne v Cave)
o Exception 1: Auctions without reserve. Here a unilateral offer is made by the auctioneer when he
promises that the auction will be without reserve. The highest bidder accepts this offer when they make their
bid (Warlow v Harrison; Barry v Davies)
o If the auctioneer subsequently refuses to sell to the highest bidder they will be in breach of the unilateral
contract and can be sued for damages for the value of the goods being auctioned (Barry v Davies). Note that
the bidder cannot sue for the goods themselves as they are part of a bilateral contract for sale which is
independent of the unilateral contract
4) Tenders
- General Rule: Tenders represent invitations to treat (Spencer v Harding)
o Exception 1: where the offeror makes an express undertaking to accept the most competitive bid8 (Harvela
Investments v Royal Trust Co)
o Offers submitted according to the requirements of a tender must be considered (Blackpool & Fylde Aero Club
v Blackpool BC)
3) Option Contracts
- Where the offeror agrees to keep an offer open for a period of time in return for valid consideration from the offeree, a
separate9 (option) contract will be created. If the offeror revokes his offer during this period he will breach this option
contract (Dickinson v Dodd; Routledge v Grant)
- An option contract must meet the same requirements as any other contract to be valid i.e. there must be valid
agreement, consideration and intention to create legal relations
4) Counter-offers and Requests for Further Information
A counter offer should be distinguished from a request for further information:
- (1) Counter-offer:
o Definition: an attempt to accept an offer on new (different) terms by changing a key term in the offer10 (Hyde
v Wrench)
o Effect: kills off the original offer and itself becomes capable of acceptance
o Battle of the forms: where multiple counter-offers exist, the last counter-offer to be accepted will prevail
(Butler Machine Tool v Ex Cell O)
- (2) Request for Further Information
o Definition: an enquiry expressed in interrogatory language relating to ancillary aspects of an offer
o Effect: no effect on the original offer, which remains open and capable of acceptance (Stevenson Jacques v
Mclean)
5) Termination
- An offer may be terminated through:
1) Rejection,
2) Revocation, or
3) Lapse
1) Rejection
- Rejection of an offer can occur by the offeree making an:
o (1) outright rejection, or
o (2) making a counter offer which is unaccepted by the original offeror
A request for information will not constitute a rejection of the offer
2) Revocation
- Whether an offer is revoked depends on whether it is a bilateral or unilateral offer:
o (1) Bilateral Offer
Revocation can occur at any time before acceptance (Payne v Cave)
Revocation must be communicated11 (Byrne v Van Tienhoven)
Revocation can be
communicated through a third party12 (Dickinson v Dodds) but note
13
Treitels criticism
8
9
An undertaking to accept the most competitive bid creates a unilateral contract to enter into a contract with the winning bidder
N.b. only the option contract will be breached by early revocation by the offeror, and the offeree will only be able to sue for damages for breach of the option, not for
the
main contract (as the main contract has not been formed yet)
10
E.g.
the price
11
How the revocation is communicated is irrelevant as long as the offerors clear intention to revoke the offer has been demonstrated (through words or conduct) and
the offeree receives notice of this intention
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12
The issue will be whether the third party demonstrates the offerors clear intention to revoke the offer. If the third party communicates anything less to the offeree
(e.g.
that the offeror has made an offer to someone else) this will likely constitute insufficient evidence of the offerors intention to revoke the offer
13
Treitel argues that revocation should only be possible by the offeror, not by a third party, because otherwise an unfair burden is placed on the offeree to determine
whether the third party communicating the revocation on behalf of the offeror is reliable or not: Certainty would be promoted if the rule were that withdrawal must be
communicated by the offeror, as well as to the offeree. Other commentators, such as Jill Poole, have argued that the question is whether the third party ought
reasonably
to be believed
14
Financings v Stimson: an implied term was attached to an offer that a car would be kept in the same condition until acceptance
15
i.e. acceptance must be unqualified and correspond precisely with the offers terms. If the acceptance is qualified in any way, it will be invalid
16
You cannot accept an offer made to someone else
17
i.e. it is the offerors fault that acceptance is not communicated e.g. he fails to check his fax messages or his computer is off
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Note the terminology: (1) covenantor: the person who made and bears the burden of the covenant (2) covenantee: the person who enjoys the benefit of the
covenant
(3) dominant land: the land enjoying the benefit of the covenant (4) servient land: the land which bears the burden of the covenant
19
This is sometimes referred to as the hand in pocket test
20
Newton Abbot v Williamsons & Treadgold: here the covenantee was an ironmonger and the covenantor promised not to use his premises as an ironmonger. The
covenant was permitted because it benefited the use and value of the land by preventing competition, even though it also benefited the covenantee in his personal
capacity
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3) It must have been the intention of the original parties that the burden should run
- An intention that the burden should run may demonstrated:
o Expressly, using express words in the covenant, and (if not expressly)
o Impliedly, by s.79 LPA 1925
s.79 will apply unless the parties have expressly excluded its application (Morrells v Oxford UFC)
4) Notice
A covenant will only bind the person buying the servient land if that person has notice of the covenant. The requirements for
notice depend on whether the land is registered or unregistered:
- Registered Land
o Entering a charge on the Charges Register of the servient land constitutes notice (s.32 LRA 2002)
o If no notice is entered, the purchaser will not be bound if he is a purchaser for valuable consideration
(s.29(1) LRA 2002)
o Any person who acquires the freehold who is not a purchaser for valuable consideration will be bound by the
restrictive covenant if it constitutes an overriding interest. The restrictive covenant will be overriding if the
person with the restrictive covenant is in actual occupation of the land (Schedule 3 Paragraph 2 LRA 2002)
o A donee or volunteer will be bound by a restrictive covenant regardless of whether it is entered on the
charges register
- Unregistered Land21
o (1) Restrictive covenants granted on or after 1st January 1926
Registration of the restrictive covenant as a Class D(ii) land charge on the land charges register
(s.2(5)(ii) LCA 1972) constitutes notice and will bind all purchasers (s.198 LPA 1925)
If not registered, the restrictive covenant will bind anyone who is not a purchaser of the legal
estate for money or moneys worth (s.4(6) LCA)
o (2) Restrictive covenants granted before 1st January 1926
The doctrine of notice applies (see 5.2 REGISTERED AND UNREGISTERED LAND for full
details):
(a) actual, constructive or imputed notice of the easement will bind a purchaser, but
(b) a donee will be bound regardless of notice
3. Determine whether the benefit of the covenant has passed in equity
In order for a covenant to be enforceable, the benefit as well as the burden must be shown to pass (Miles v Easter; Re Union
of London and Smiths Bank)
In order for the benefit to pass in equity the covenant must:
1) Touch and concern the land
o The covenant must not be purely personal to or merely benefit a particular owner but must benefit the land
itself by affecting its value, nature, quality or use (P&A Swift Investments v Combined English Stores, per
Lord Oliver) (see above)
2) Have passed in one of the following three ways (Renals v Cowlishaw, per Sir Charles Hall VC)
o (1) Annexation
o (2) Assignment
o (3) Scheme of development
1) Annexation
- The benefit of the covenant must be permanently attached to the dominant land at the point when the covenant is
created
o Annexation of the benefit to the whole of the dominant land constitutes annexation to every part of the land
(Federated Homes v Mill Lodge Properties)
o The size of the dominant land is irrelevant (Wrotham Park Estate v Parkside Homes; Marten v Flight
Refuelling)
- There are three methods of annexation:
1) Express
2) Implied
3) Statutory
The same principles of enforcement in unregistered land apply to restrictive covenants in a lease
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22
The reason for this is that if the class of beneficiaries never became closed and fixed, the trustees would be required to retain the trust property forever, which
would defeat the whole purpose of the trust as the beneficiaries would never receive their beneficial interest
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2) Outright Gift to present members absolutely (Leahy v AG for New South Wales)
- The outright gift interpretation interprets the testators gift as divided into equal shares among the individual members
of the association
- The outright gift to present members absolutely only applies in limited circumstances: usually where (Re Grant, per
Vinelott LJ):
o (1) the testator/ donor has not directed how the gift should be used (Cocks v Manners), and
o (2) the group of beneficiaries is small (Re Grant, per Vinelott J)
Ideally, the club name should only be functioning as a convenient label for a small number of
individuals whom the testator wishes to benefit
- The current members of the club each receive equal shares of the gift (each member taking an immediate individual
share)
- Beneficiary principle
o The beneficiary principle is complied with as the current members are all ascertainable
- Perpetuity
o The perpetuity requirements are complied with as the property vests in the members immediately (i.e. the
beneficiaries are free to treat the property as they wish)
- Potential issues
o Because each of the members receives a share of the gift absolutely, there may be issues with the
construction due to the following (Leahy v AG for New South Wales):
(1) The gifts wording
The construction must take affect as a gift. This will contradict any wording which
indicated that the testator indicated a trust. In addition, the testator is unable to:
o (1) retain any control over the property, or
o (2) ensure the property is used according to his intentions (or even for the
purposes of the association)
(2) The nature of the property
It is unusual for a testator to have intended a gift to an association to be divided into small
shares between every beneficiary
(3) The nature of the beneficiaries
It will be difficult to use the outright gift interpretation where the beneficiaries are:
o (a) Numerous, and/ or
o (b) Diversely located
3) Gift to members subject to contract (The contractual anaylsis) (Re Recher)
- The contractual analysis interprets the gift as a gift to the members of the club subject to their duties and
obligations to the club
- The contractual analysis is the most common interpretation (Artistic Upholstery v Art Forma; Hanchett-Stamford v HM
Attorney General)
- The interpretation can only apply where:
o (a) the testator intends a gift (Leahy v AG for New South Wales), and/or
o (b) the association possesses identifiable rules, and
o (c) the association still exists (Re Recher)
- It is irrelevant who the club benefits (i.e. its members or someone else) (Re Recher)
- Beneficiary principle
o The beneficiary principle is satisfied as all members are identifiable at any particular given point in time
The fact that the composition of the members may change over time is irrelevant
- Perpetuity
o The perpetuity rules are satisfied as long as the members are free to deal with the property (i.e. they must
be able to divide up the property themselves at any time)
- Control
o The associations rules must permit its members to have a sufficient degree of control over the assets
(internal control) to the extent that they are free to deal with the property, including both its capital and
income, as they wish. This includes the right of the members, as a group, to decide to use the gift for a
purpose other than that intended by the testator
o There may be some element of external control over the association (Re Horley Town) but it must be
minimal and not in any way restrict the members internal control (Re Grant)
- Where a testator states a specified purpose or limitation for the gift that
will not necessarily invalidate the members
control over it as it may instead be viewed as a motive (Re Lipinski23)
(CONTINUED IN FULL VERSION)
23
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