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1、Semple Piggot Rochez 173B Cowley Road Oxford OX4 1UT www.spr- SECTION II LAW OF CONTRACT ELEMENTS OF THE LAW OF CONTRACT CASES AND STATUTES CONTENTS Capacity. 1 Express and Implied Terms . 6 Classification of Terms . 12 Exemption Clauses I . 17 Exemption Clauses II . 22 Misrepresentation . 30 Mistak
2、e I . 39 Mistake II . 44 Section II SEMPLE PIGGOT ROCHEZ 1 ELEMENTS OF THE LAW OF CONTRACT 1. CAPACITY Aims and Objectives (a)To examine the extent to which contracts made by minors may be valid; (b)To examine the effect of entering a void or voidable contract with a minor. Statutes and case LawRati
3、o and Fundamental Features Contracts for necessaries The Sale of Goods Act 1979 s.3(2) Where necessaries are sold and delivered to a minor he must pay a reasonable price for them. Section 3(3) . “necessaries” means goods suitable to the condition in life of such a minor and to his actual requirement
4、s at the time of sale and delivery. Peters v Fleming (1840) 6 M she could not marry during the apprenticeship; he could end the contract if he found her unsuitable; and she could not accept any professional engagement without his consent. She accepted an engagement with Barnum without her masters co
5、nsent. The master sued Barnum for the tort of inducing a breach of contract. It was held that there was no contract to breach as it was unduly harsh. Voidable contracts Edwards v Carter 1893 AC 360 A minor may avoid a contract of continuing obligation during minority or within a reasonable time ther
6、eafter. In this case four and a half years was held to be too long. These include contracts where a minor acquires an interest in subject matter of a continuing nature, such as a lease or shares in a company. Where he avoids a contract, the infant avoids future liabilities under it, but not past one
7、s, e.g. he will have to pay back-rent, but not any future instalments. Steinberg v Scala (Leeds) Ltd 1923 2 Ch 452 (CA) Avoidance of a contract does not entitle the minor to recover any money already paid over, unless he has received absolutely nothing for it (i.e. there has been a total failure of
8、consideration). Section II SEMPLE PIGGOT ROCHEZ 3 Statutes and case LawRatio and Fundamental Features Void contracts equitable remedy of restitution Stocks v Wilson 1913 1 KB 235 A minor obtained goods under a contract induced by fraud, and sold them. It was held that as the goods supplied were trac
9、eable to the proceeds of the sale, he must account to the original seller for those proceeds. R Leslie Ltd v Sheill 1914 3 KB 607 A minor fraudulently borrowed 400. It was held that he was not liable to account as he had spent the money on diverse items which were not traceable to the actual loan mo
10、ney. Void contracts statutory remedies The Minors Contracts Act 1987 Section 2. Where (a)a guarantee is given in respect of an obligation of a party to a contract and (b)the obligation is unenforceable against him because he was a minor when the contract was made, the guarantee shall not for that re
11、ason alone be unenforceable against the guarantor. Section 3. Where (a)a person (the plaintiff) has after the commencement of this Act entered into a contract with another (the defendant) and (b)the contract is unenforceable against the defendant (or he repudiates it) because he was minor when the c
12、ontract was made, the court may, if it is just and equitable to do so, require the defendant to transfer to the plaintiff any property acquired by the defendant under the contract, or any property representing it. Section II SEMPLE PIGGOT ROCHEZ 4 SELF-ASSESSMENT QUESTIONS 1.What is the distinction
13、between necessaries and necessities? 2.What is the liability of a minor for necessary goods that he has bought? 3.Are contracts with minors valid re or consensu? 4.When may someone who has lent money to a minor claim subrogation? 5.When will a minors contract of service be invalid? Section II SEMPLE
14、 PIGGOT ROCHEZ 5 6.What kinds of contracts with minors are voidable? 7.How may a minor avoid a contract? 8.What remedies are available in equity for people who have supplied goods to a minor under a void contract? 9.How has The Minors Contracts Act 1987 improved the remedies of those who deal with m
15、inors? 10. In what circumstances may a minor be sued in tort as an alternative to suing him under a void contract? Section II SEMPLE PIGGOT ROCHEZ 6 2. EXPRESS AND IMPLIED TERMS Aims and Objectives (a) To distinguish between express terms of a contract and mere representations; (b) To examine when e
16、vidence of terms may be allowed, contrary to the parol evidence rule; (c) To examine how terms may be implied into a contract by the courts and under statute. Statutes and case LawRatio and Fundamental Features EXPRESS TERMS Express terms and representations verification Ecav v Godfrey (1947) 80 L1
17、LR 286 If the maker of a statement suggests that the other party gets it checked, it is unlikely that he meant it to be a term. On the other hand, if he tries to prevent him from checking it, it is likely to be regarded as a term. Thus when the seller of a boat told a prospective buyer that the boat
18、 was sound, but advised him to get it surveyed, it was held that the statement as to its soundness was a mere representation. Schawel v Reade 1913 2 IR 64 The buyer of a horse was about to inspect it, when the seller said: You need not look for anything; the horse is perfectly sound. If there was an
19、ything the matter with the horse I should tell you. It was held that this statement was a term. Hopkins v Tanqueray (1854) 15 CB 130 A seller made a very similar statement to that in Schawel v Reade which was held NOT to be a term when the buyer bought the horse at an auction at Tattersalls. This wa
20、s because auctions at Tattersalls are known to be without warranty. Express terms and representations importance Bannerman v White (1861) 10 CB NS 844 A buyer of hops asked if sulphur had been used in their cultivation, adding that, if it had, he would not even bother to ask the price. He was assure
21、d that sulphur had not been used. This was held to be a term. Section II SEMPLE PIGGOT ROCHEZ 7 Statutes and case LawRatio and Fundamental Features Couchman v Hill 1947 KB 554 (CA) The plaintiff wished to buy a heifer which was described in the auction catalogue as being unserved. He verified this w
22、ith both the owner of the heifer and the auctioneer before the sale as he did not wish to buy it otherwise. When the heifer died from a miscarriage seven weeks later, the plaintiff successfully sued the owner for breach of warranty, despite the fact that the catalogue said that no warranty was given
23、 as the condition of the stock. Oscar Chess v Williams 1957 1 WLR 370 The defendant sold a car described as a 1948 Morris 10. In fact it was a 1939 model, worth rather less. It was held that this was not a term. The buyer might still have entered into the contract if he had known the truth, though h
24、e would have paid less. (See also under the next heading below.) Express terms and representations special knowledge Oscar Chess v Williams 1957 1 WLR 370 (See above for facts.) The court found it to be significant that the seller was relying in good faith on the forged log-book and was dealing with
25、 a company of motor dealers who could have got the information checked themselves. The seller did not intend to bind himself so as to warrant the car was a 1948 model. If the seller was asked to pledge himself to it, he would at once have said I cannot do that. I have only the log-book to go by, the
26、 same as you. per Denning LJ Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd 1965 2 All ER 65 (CA) A dealer sold a Bentley car, claiming that it had done only 20,000 miles since a replacement engine was fitted. In fact it has done nearly 100,000. His statement was held to be a warranty sinc
27、e he was in a better position to know the truth than the buyer. Express terms in collateral contracts Henderson v Arthur 1907 1 KB 10 (CA) This is a good example of the parol evidence rule that extrinsic evidence of the terms of a contract cannot be used to contradict the written terms of a contract
28、. Here a lessee was unable to give evidence of an oral agreement that he should be allowed to pay the rent in arrears. City so that, if while the parties were making their bargain an officious bystander were to suggest some express provisions for it in their agreement, they would testily suppress hi
29、m with a common, Oh, of course. per MacKinnon LJ Ashmore and Others v Corporation of Lloyds (No 2) 1992 2 Lloyds Rep 620 The court in this case considered the operation of both the business efficacy test and the officious bystander test. The Lloyds names who had made considerable losses out of insur
30、ance contracts claimed that there was an implied term in these contracts that they should have been alerted to any matters which might have adversely affected their interests. Gatehouse J found that neither test applied. The contracts were workable without the implied term (so the first test did not
31、 apply) and the question that an officious bystander might ask would have to be so complex that it would be unlikely to evince the answer oh, of course. Spring v N A S D S 1956 1 WLR 585 A trade union argued that there was an implied term in a contract that one of its members should comply with the
32、Bridlington Agreement. As the member in question had never heard of this agreement, the argument was rejected. Implied Terms Raiffeisen Zentralbank Osterreich Aktiengesellschaft v National Bank of Greece SA 1999 1 Lloyds Rep 408 In this case where the central dispute concerned whether the High Court
33、 had jurisdiction under Article 5 of the Brussels Convention the plaintiff averred that the principal obligation under the contract took form in an implied term. The courts view was that, so long as there was a good case for the existence of a contractual term, for the purposes of Article 5 jurisdic
34、tion, it did not matter that the principal obligation was an implied term whose existence could not be shown as clearly as a claim based on an express term. Section II SEMPLE PIGGOT ROCHEZ 9 Terms implied by the courts in law Liverpool City Council v Irwin 1977 AC 239 (HL) The tenants of a block of
35、flats withheld the rent on the basis that the landlord (the council) was in breach of contract for not keeping the lifts and communal stairwells in a reasonable state of repair. There was no formal agreement that the landlord was responsible for this, but the House of Lords held that, as a matter of
36、 policy, there wire implied terms to this effect. They Lords rejected Lord Dennings suggestion in the Court of Appeal that a term may be implied simply because it would be reasonable to do so. Express and Implied Terms Freeguard and Another v Rogers and Another 1999 1 WLR 375 CA The defendants agree
37、d to let a property to the plaintiffs with an option to purchase. The plaintiffs sought to exercise the option. The property was described in the agreement as the property known as a given address. The title number (supplied by the defendants) by which the property was further described was wrong. T
38、he defendants maintained that the property did not include the garage. The plaintiffs insisted that the garage was included and that all the household chattels were included in the agreement. The garage was actually held under a title number different from the title number for the house and differen
39、t from the wrongly given title number which had been put into the agreement. The deputy master considered that there was an exception to the parole evidence rule that allowed the admission of extrinsic evidence to identify the subject matter of an agreement where that was in doubt. The Court of Appe
40、al held that where a property was described as a property known as it was permissible, indeed inevitable, that recourse would have to be had to extrinsic evidence. It was therefore proper for the appearance of the property itself and the description in the estate agents particulars to be taken into
41、account. These showed that the garage was included in the option. However, the Court also held that damages had not been proved. No date for completion had been fixed. It was clear that the plaintiffs did not intend to complete without the garage and that the defendants did not intend to complete if
42、 the chattels were included. Thus, it could not be said that the defendants had, by not completing in a reasonable time, caused loss to the plaintiffs. Finley v Connell Associates (A Firm) The Times, 23 June 1999 (QB) The Court of Appeal held that when a creditor entered into an agreement not to sue
43、 a principal debtor, it was possible to imply a reservation of rights against a surety. Such an implied term would have the same effect as an express term in that it would prevent the surety from being discharged. See also the beer tie case under “Illegality”. Section II SEMPLE PIGGOT ROCHEZ 10 SELF
44、-ASSESSMENT QUESTIONS 1.Why is it important to distinguish a term from a mere representation? 2.What factors will a court consider in deciding whether a precontractual statement has become a term of the contract? 3.Distinguish the cases of Oscar Chess v Williams 1957 and Dick Bentley Productions Ltd
45、 v Harold Smith (Motors) Ltd 1965. 4.What is the parol evidence rule? 5.What is a collateral contract? Section II SEMPLE PIGGOT ROCHEZ 11 6.Distinguish the cases of Henderson v Arthur 1907and City (b)To examine the effect of the Unfair Contract Terms Act 1977; (c)To examine the changes made by the U
46、nfair Terms in Consumer Regulations 1994. Statutes and case LawRatio and Fundamental Features THE EXEMPTION CLAUSE MUST COVER THE BREACH COMPLAINED OF Contra proferentem rule Houghton v Trafalgar Insurance Co Ltd 1954 1 QB 247 (CA) A five-seater car was involved in an accident whilst carrying six pe
47、ople. The insurance policy excluded liability where the car was carrying an excess load. It was held that passengers were not a load and so the exclusion clause did not apply. Andrews Bros (Bournemouth) Ltd v Singer and Co Ltd 1934 1 KB 17 (CA) A clause in a dealership agreement provided that all co
48、nditions, warranties and liabilities implied by statute, common law or otherwise are excluded. It was held that this was not effective to protect the defendants from breach of an express term. Hollier v Rambler Motors (AMC) Ltd 1972 2 QB 71 (CA) A car left for repair was damaged in a fire caused by the garage owners negligence. There was a