THIS PAPER IS NOT TO BE REMOVED FROM THE EXAMINATION HALLS

UNIVERSITY OF LONDON LA1040 October

DIPLOMA IN LAW/CertHE COMMON LAW

LLB
DIPLOMA IN THE COMMON LAW
BSc DEGREES WITH LAW

Contract law

Tuesday 16 October 2018: 10.00 – 13.15

Candidates will have THREE HOURS AND FIFTEEN MINUTES in which to

answer the questions.

Candidates must answer FOUR of the following EIGHT questions.

Candidates must answer all parts of a question unless otherwise stated.

Permitted materials
Students are permitted to bring into the examination room the following
specified document: one copy of Core Statutes on Contract, Tort & Restitution
(Palgrave Macmillan).

© University of London 2018

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1. (a) ‘A party who makes a unilateral offer to another may not
withdraw that offer once the offeree has commenced
performance of the stipulated act.’

Discuss.

(b) Arvind has a Bentley car in his showroom with a sticker on the
windscreen saying £40,000. Daphne calls into the showroom and
offers Arvind £35,000 for the car which he refuses. That evening
Arvind decides that £40,000 is too low a price and changes the
sticker to £45,000. The following day Daphne passes the
showroom before it opens and does not notice the new sticker.
However, she puts a note under the door saying ‘Ok I’ll give you
the £40,000’. Arvind reads the note but does not reply. On her
way home from work Daphne calls into the showroom but Arvind
has gone home early. His assistant Kristos explains that the price
has increased. Daphne says: ‘Ok I will assume that the car is mine
for £45,000 unless I hear to the contrary from Arvind tomorrow
morning.’ The next day Daphne visits the showroom at 1pm but
Arvind tells her he has now decided to keep the car for himself.

Advise Daphne.

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2. Squeezy Jet is a new ‘low cost’ airline. Squeezy Jet enter an agreement
to hire two aeroplanes from Boring Plc. The hire agreement provides
that:

(a) hire is payable from 1st January 2017 for two years at a
rate of £250,000 per aeroplane, per month, payable in
advance; and

(b) pilots shall be provided by Boring Plc.

Squeezy Jet allocates the first aeroplane to their new London-Shanghai

service and the second to their popular London-Paris route.

On 1st January 2018, after a year’s operation, the London-Shanghai

route is making heavy losses and so Boring agree to a reduction in hire
for the first jet to £125,000 per month ‘until market conditions improve’.
At the same time Squeezy Jet decides to increase its advertising budget
by £125,000 per month.

On 1st July 2018 the London-Shanghai route is profitable. Boring tell

Squeezy Jet that the rate of hire will again be £250,000 per month from
1st August. They also regret their earlier concession and so demand the
balance of the underpayments made from January–July 2018. At the
same time, they tell Squeezy Jet that they want to increase the hire for
the second aeroplane to £300,000 per month but that they will refurbish
the seats if Squeezy Jet agree to the increase. Squeezy Jet protest but
reluctantly agree as they are unable to obtain a replacement plane
elsewhere. The refurbishment is done without any interruption to
Squeezy Jet’s service.

Squeezy Jet denies that it is liable to pay any more than £125,000 per
month after 1st January 2018 in respect of the first aeroplane or any more
than £250,000 per month for the second aeroplane.

Discuss.

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3. Melissa is opening a new nightclub in which she wants to install a
mirrored ceiling. She contacts Wayne, a builder, to give an estimate for
the work. Wayne visits the premises and says that he can do the work
for £30,000. Melissa thinks this is an excellent price and so when Wayne
produces a sheet of paper headed ‘Agreement’ she quickly signs it
without reading. If she had read it she could probably have just made out
the following clause which appeared in small writing at the bottom of the
sheet:

‘Any liability for consequential loss or damage arising from breach

of contract shall not exceed £10,000. Customers are advised to
arrange their own insurance cover if loss or damage may exceed
this amount.’

The installation is completed a week before the opening of the nightclub.

Unfortunately, the fittings Wayne used were inadequate and this would
have been obvious to any reasonably competent builder. That evening
the ceiling collapses and damages the newly installed dancefloor which
will cost £20,000 to repair. Melissa was admiring the ceiling at the time
and suffers severe cuts.

Wayne refuses to pay any compensation.

Discuss.

4. ‘The grounds upon which a contract is rendered void or voidable

because the parties to it made a common (ie shared) mistake are very
narrowly defined.’

Critically evaluate the above statement.

5. ‘In Patel v Mirza (2016) the Supreme Court noted that the topic of
illegality had “caused a good deal of uncertainty, complexity and
sometimes inconsistency”. Unfortunately, the judgments in that case did
little to resolve the problems they had identified.’

Critically evaluate the above statement.

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6. Fabian builds wooden yachts. On 1st May Fabian enters a contract with
Melinda, a successful business woman, to construct a yacht. The
contract states that the hull should be constructed from ‘zebrano’, an
exotic and attractive wood and that the contract price of £600,000 should
be paid in equal instalments on the 1st June, 1st September and 1st
December. While discussing the contract on 1st May Fabian also agrees
to make a scale model of the yacht for Melinda’s office for a further
£1,000 payable on the model’s completion. The model is to be carved
from a piece of wood supplied by Melinda which had been salvaged from
the wreck of the Titanic.

On 1st August the UK government ban the importation and use of

zebrano in order to try to preserve tropical rainforests. Neither Fabian
nor any timber merchant has sufficient stocks of zebrano to complete the
yacht. At this time Fabian has only received the first payment of
£200,000 but had incurred costs of £300,000. Unfortunately, also on 1st
August, the model yacht which was almost complete was destroyed in a
small fire at the yard caused by a lightening strike.

Advise Fabian as to his contractual rights and liabilities arising from the
above facts with reference to the doctrine of frustration.

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7. Tony owns an art gallery specialising in selling sculptures. On 1st
February he sells four sculptures for £100,000 each which he has
labelled as being by Rodin, a famous sculptor, to the following
customers:

(a) Kim buys the sculpture ‘Man’. Kim keeps the statue in his
garden where it is damaged by frost over the winter.

(b) Guy buys the sculpture ‘Woman’. Before purchasing the

sculpture Guy gets it inspected by Professor Bright, an
expert on Rodin’s sculptures, who tells Guy he is sure it is
a genuine Rodin.

(c) Donald buys the sculpture ‘Girl’ because it looks like his
daughter. He does not even read the label which states
that it was by Rodin.

(d) Homer is setting up his own gallery in which he hopes to

sell sculptures and, in order to generate publicity, he wants
to have a ‘special’ sculpture to sell when he opens. He has
been looking at ‘Baby’, another sculpture in a different
gallery being offered for the same price, but decides
instead to buy ‘Boy’ from Tony.

On 1st August a previously unknown diary of Rodin’s is discovered which

lists all his sculptures and conclusively proves that ‘Man’, ‘Woman’, ‘Boy’
and ‘Girl’ are fakes worth no more than £1,000 but that ‘Baby’ was a
genuine Rodin sculpture. When this discovery becomes known, Kim and
Guy are embarrassed to have bought ‘fake’ statues and so want to
‘return’ them and get their money back. Donald has now fallen out with
his daughter and so also wants to give the statue back and receive
compensation. Homer is happy to keep the statue but wants to claim as
much compensation as possible to help with the cost of opening his new
gallery.

Advise Tony as to his liability for misrepresentation arising from the

above facts.

8. ‘The principle(s) of remoteness of loss applicable to an action for breach

of contract are easier to describe than to justify.’

Discuss.

END OF PAPER

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