Contract Law

Part (B)
Task 2
(AC 1.3)

Assess the requirements for a valid consideration:

Definition Currie V Misa [1875]:
A valuable consideration, in the sense of law, may consist either in some right, interest,
profit or benefit, accruing to the one party, or some forbearance, detriment, loss of
responsibility given, suffered or undertaken by the other.
Consideration has been called the’ badge of enforceability, in agreements. This is
particularly important where the agreement involves a promise to act in a particular way
in the future.
For example, ‘i will deliver these goods next thursday, or ‘i will pay you $ 1,000 on 1
january’ (executive consideration) it becomes important to decide whether that promise
is supported by consideration’(that is ,something has been given or promised in
exchange).
Section (1): Of the law of property (Miscellaneous provisions) Act 1989.) Where a
promise for the feature is not contained in a deed, then consideration becomes the
normal requirement of enforceability.

Thomas V Thomas 1842:

● A husband wished for his wife to inherit his house.
● The executors of the husband’s will agreed that the wife could have possession
of the house in return for the wife paying $ 1per year ground rent.
● The executors refused to go through with the agreement.
● Does consideration ($1) have to be sufficient.
● No, claim allowed.
● Consideration must be present, but it need not be sufficient. It is for parties to
ensure that they get themselves a good bargain.

White V Bluett [1853]:

● Could Not complaining, constitute good consideration for the promise of not
needing to repay the debt.
No consideration, debt repayable.
● Susch consideration cannot be of value in the eyes of the law;there is no right to
complain.
Task 2
(AC 3.3

Analyse the development of the doctrine of duress:

Threats, violence, constraints, or other actions are used to coerce someone into
doing something against their will or better judgement.
“Confession extracted under duress”.
● Constraint illegally exercised to force someone to perform an act.
If Bob makes unlawful threats or engages in coercive behavior that causes
his Aunt Sally to sign an agreement or execute a will against her will, then Bob is
causing Aunt Sally to be “ under duress.”

Bank of Credit and Commerce International S.A v

Aboody [1990]:
Mrs. Aboody signed a document making a charge over the family home in favour
of Bank of Credit and Commerce International, to secure her husband’s borrowing
for his company. Mr. Aboody had bullined her, and she has signed to get some peace.
2Slade LJ held that because of National Westminster Bank plc v Morgan [1985]
UKHL 2 “manifest disadvantages” had to be shown even in cases of actual under
influence. The transaction was not manifestly disadvantageous, but this requirement
was subsequently overruled in CIBC Mortgages plc v Pitt [1933] UKHL 7 (21 October
1933).
● Duress to the person.
● Duress to goods.
● Economic duress.
Duress to the person commonly refers to violence, either actual or threatened, against
the person or party who has been induced to enter into a contractual agreement by
reason thereof.
Duress to goods occurs when one party withholds the goods of another party until the
party enters into an illegal contract. This leaves the party with no alternative other than
to give in to the coercion. …The court set aside the contract on the basis that it was
made under duress.
:Wrongful or unlawful conduct that creates fear of economic hardship which prevents
the exercise of free will in engaging in a business transaction and also the defence of
economic duress. -called also business compulsion.

Stilk v Myrick [1809]:

 ● At the halfway point of a journey, 2 of 12 members deserted the captain's ship.
● The captain later refused to pay.
● Was the sailing of the ship considered for the captions promise of the extra
money.
● No claim.

The sailors were already obliged to sail the ship, therefore there was no consideration
for the extra money.

Merit grade limitation william v roffey bros(1991):

Where A and B are in an existing contract and A promises to give more to B this
promise will be binding if A receives a practical benefit even though B is only doing what
they promised to do under the original contract. This rule applies to variations to existing
contracts only. In short, if A receives any short of factual benefit in return for promising
to give more to B, a court will find consideration for that promise and A must give the
extra to B. You might be thinking’ why do the courts apply a test that is so easy to
satisfy?’. One answer is that the courts will try and uphold changes to a contract and do
not want to interfere with any variation. When covering this case, and this topic,
remember that the courts will strive to find practical benefit because they do not want to
invalidate the agreement to give more.

● Roffey Bros contracted with a housing association to refurbish flats.

● Roffey Bros contracted with Williams for Williams to complete carpentry work on
● 27 flats as part of the housing refurbishment project.
● Roffey Bros would pay $20,000 installments to Williams as the work progressed.
● All Williams had to do was complete the original schedule.
● Roffey Bros met with Williams. Roffey Bros agreed to pay Williams an extra $575
per flat completed.

Be Careful: We are focused on the contract between Williams and Roffey Bros. The case
focused on a variation of the contract between these two parties.

The appellants argued that the agreement to pay extra was enforceable as Williams had
provided no consideration; the appellants only received the practical benefit of avoiding
the penalty cause. They did not receive any benefit in law. Williams was only agreeing
to do what he was already bound to do. The appellant relied on Stilk v Myrick (1809) 2
camp 317 where it was held that performance of an existing duty was not considered.
The court of Appeal held that the doctrine in Stilk v Myrick had been refined since then.
Gildwell LJ said a promise to make bonus payments to complete work on time was
enforceable if the promisor obtained a practical benefit of the promise was not given
under duress or by fraud. It was the appellants’ own idea to offer the extra payment.
Therefore, there was no duress. The appellants also gained a practical benefit avoiding
the penalty clause. Russel LJ said (at 19) that the court would take ‘a pragmatic
approach to the true relationship between the parties;

Consequently, the promise for the extra pay was enforceable.

Task 3

Part C

(AC 2.1)

Explain the difference between terms and representations:

A contract term is “any provision forming part of a contract”. Each term gives rise to a
contractual obligation, breach of which can give rise to litigation. Not all terms are
started expressly and some terms carry less legal gravity as they are peripheral to the
objective of the contract.

● Contract type Overview.

● Express and limited Contracts.
● Unilateral and Bilateral Contracts.
● Unconscionable Contracts.
● Adhesion Contracts.
● Aleatory Contracts.
● Option Contracts.
● Fixed Price Contracts.

Statements made during the course of negotiations could amount to a contractual term
or a representation. It is important to know whether a particular statement is a contract
term or if it is a representation as this will determine the appropriate cause of action and
remedy available. If the statement amounts to a term of the contract which is not
fulfilled, the innocent party may sue for breach of contract. If the statement is merely a
representation which turns out to be untrue, the innocent party may bring an action for
misrepresentation.

Hedley Byrne v Heller Partners Ltd [1964]:

● The claimants wanted reassurance that they could provide credit to another
company (Eazypower). The financial stability was reassured by Eazipower’s
bank, the defendants.
● Soon after giving credit, the Eazypower defaulted and the claimants were liable
for Eazipower’s debts.
● Could the claimants recover for the negligent preparation of Eazi Powers
accounts by the defendants
● Could a duty be owed in ‘negligent misstatement’, a concept previously not
used.
 ● There was a duty, but no liability on the facts.
● Where the skill of one is used “for the assistance of another person who relies on
such a skill, a duty of care will arise”.
● If there is a special relationship and reasonable reliance, there is a duty of care.

Esso Petroleum Co Ltd v Mardon [1976]:

● Modern severely underestimated the throughput of petrol in a petrol station due
to changing circumstances which we were aware of.
● Esso relied on this estimation.
● In the proceeding contract, could Mardon be liable.
● Liability allowed.
● There was reliance and the Hedley Byrne principle was applicable.
Task 3
(AC 2.2)

Identify the sources of contractual terms:

Contractual terms are defined as conditions, warranties or innominate terms. This may
be specified in the contract, implied by the nature of it, or implied by law.There are two
principle sources of contractual terms: express terms and implied terms. Express terms
are the terms which are agreed specifically by the contracting parties and implied terms
are those terms which are not specifically agreed by the contracting parties but which
are implied into the contract by the courts or by parliament. We shall deal with implied
terms at 9.8. Here we shall focus our attention on express terms.
We have thus far distinguished between contractual terms and representations on the
basis that if the statement was a contractual term then it was a term of that particular
contract. It is also possible that the statement is a term of a separate contract - a
contract collateral to (i.e running beside) the main contract. For example, it may be that I
contract to sell you my antiquarian bookshop. I provided you with figures demonstrating
past sales. This statement is not included in the contract of sale; however, it was made
with contractual intent and it forms the basis of a collateral contract.

Esso Petroleum Co Ltd V Mardon [1976]:

● Mardon severely underestimated the throughput of petrol in a petrol station due
to changing circumstances which he was aware of.
● Esso relied on this estimation.
● In the proceeding contract, could Mardon be liable.
● Liability allowed.
● There was reliance and the Hedley Byrne principle was applicable.

(AC 2.3)

Distinguish between conditions,warranties and innominate

terms:
Conditions, warranties and innominate terms:
“Innominate terms” refer to contractual terms that lie in libo. … The general rule to
differentiate between a “condition” and a “warranty” is to determine whether the term
deals with a primary obligation of the contract. The intention of the parties towards that
particular term is also an important consideration.
A condition is a requirement or limitation involved in a contract, trust, law, or other
legally recognized document that changes the rights and duties of those involved. …
Keep the contract a secret.
Warranty, a promise or guarantee made by a seller or lessor about the characteristics or
quality of property, goods, or services. … In the event that a warranty is breached, the
law provides the injured party with the right to monetary damages, repair of the original
good, or replacement with substitute goods.
An innominate term is the middle point between a condition and warranty. It is often
considered the “no-means land” between the two. Innominate terms, conditions, and
warranties are types of promises in contracts. … In some cases, a breach allows the
aggrieved party to terminate the contract.
For this reason it is most important to define the breaches which will give the injured
party the right to refuse further performance. A solution to this was found in the 19th
century by classifying the terms of contract into the two following types.
● Conditions: Breach of which gave the right to refuse further performance.
● Warranties: For breach of which damages were the only remedy.

Re Moore Landauer [1921]:

A contract for the sale of 3,100 tines of peaches described the tins as being packed in
cases of 30. When they arrived the tins were packed in cases of 24 although the agreed
overall number of tins was supplied.
The purchaser was entitled to reject the goods as they were not as described.

Bettini v Gye [1875]:

The claminet, Alessandro Bettini (a tenor) entered into an agreement with the
defendant, Frederick Gye. The terms of that agreement were that Bettini would not
perform within 50 miles of London in any venue, apart from the Royal Italian Opera
Covent Garden within the time period of 1 January 1875 to 1 December 1875. Further,
between 30 March 1875 and 13 July 1875, Bettini would perform for Gye in return for $
150 per month. The agreement also stipulated that Bettini must be in London 6 days
before rehearsals “without fail”. Bettini however arrived two days before his performance
period was to begin. Gye however declined to have him perform at his opera.

Blackburn J held that this requirement did not amount to a condition, but was instead a
warranty which meant that Gye could not terminate the contract on that basis. A breach
of this is not a repudiation of the contract, and Gye would only have an action in
damages.
“Going to the root of the matter, so that failure to perform it would render the
performance of the rest of the contract by the plaintiff a thing different from what the
defendant has stipulated for.”

- (Blackburn J)