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Contract Law Exam Questions
Answered

Question 1

QUESTION 1

On Tuesday 6 April Tyrell placed an ad for the sale of his laptop at £1,000 on the website Laptops4us.

Aanya saw the ad and clicked on the item icon in order to process the transaction. She became distracted when her phone rang and she left the computer screen with the message, ‘transaction pending’.

Lakshman phoned Tyrell and asked, ‘Is there any discount if I give you cash for the laptop?’. Tyrell replied ‘No. I will sell you the laptop at £1,000, as advertised’. Lakshman replied, ‘Let’s call it £950 and I’ll come to your house now and pay you’. Tyrell was interrupted by a parcel delivery at his front door. Lakshman hears Tyrell say ‘Yes’, when in fact Tyrell is answering the delivery man’s query. Tyrell hangs up the phone.

At 5pm that day, Tyrell receives an email from Abner who says ‘Hi Tyrell, I’d like to buy your laptop’. Tyrell emails him in reply, ‘That’s fine, £1000 – I’ll sell it to you for that’. Abner emails Tyrell at 5.30pm saying, ‘Ok, I’ll buy your laptop for £1,000’. Due to a technical fault, Abner’s email does not appear in Tyrell’s email inbox until 8.30pm that evening.

At 8.15pm Tyrell, believing that Abner was no longer interested, leaves a voicemail message on Abner’s phone saying ‘Look, I have not received any reply from you. The offer is withdrawn’. To make absolutely sure that Abner gets the message Tyrell calls Abner’s neighbour, Nosie, and asks her to deliver the message. She agrees to do so.

At 8.40pm, Tyrell checks his email and sees that Abner had sent his acceptance. He assumes that Abner must have received his message about the offer.

Later on, Tyrell removes the laptop from the website and sends a text to his friend Tabitha saying, ‘I’m selling my laptop. Do you want it?’ She replies in a text saying, ’Yes, please. How much?’ Tyrell replies, ‘£1,000’. Tabitha says, ‘Hmmm… Let me make it legally binding. You know I’m a solicitor, so I’ll draft a short, written contract and we’ll meet at our usual bar tomorrow’.

On Wednesday 7 April Tabitha meets Tyrell at their local bar and after several glasses ofwine, Tabitha says, slightly inebriated, ‘You know, I drafted a written contract of sale for that laptop. Keeps things watertight. But we don’t need that now that we’re here. Let’s just shake  hands on it. £10,000!’. They both shout‘Yeah!!’, shake hands, raise their wine glasses and take another drink.

Question 2

On Thursday 8 April, Aanya checks the website Laptops4us and seeing that the laptop is ‘no longer available’, she believes that her transaction was duly processed. To verify, she checks her bank account details on her phone, which tell her that there is ‘£1,000 pending transaction.’ That particular message in fact relates to the purchase of a new mobile phone. Later that day, Lakshman arrives at Tyrell’s apartment with £950 in cash and tells Tyrell, ’Sorry about the delay, I’ve got the £950 for the laptop’.

At the same time Tyrell’s phone pings and he sees a text from Aanya. In the text she thanks Tyrell for the laptop, as she sees that her transaction at £1,000 is being processed. Tyrell receives an email from Tabitha reminding him about what she had drafted to make the agreement binding.

Advise the parties, giving reasons, as to with whom, if anyone, does Tyrell have a contract. In your advice, you must be able to identify and discuss areas of the law where there is uncertainty.

QUESTION 2

Corey has bought The Corporate Cafe from Isha. The cafe is affiliated to a large corporation nearby. Isha tells Corey that the cooker units appear to have been well looked after and although old, they are compliant with the current legal regulations for such appliances. Actually, although in a reasonable state of repair, the cooker units contravene legal regulations.

Isha tells Corey that the business has an annual turnover of £100,000. Half of this income has been provided by the corporation. Isha does not tell Corey that the corporation have just given notice to cease the affiliation.

Isha also informs Corey that planning permission for a multiplex cinema has been given and the positioning of their car park should encourage an increase in regular trade. This statement is true at the time it is made, but Isha learns that before the conclusion of the sale that the cinema intends to offer its own version of the ‘Corporate Cafe’ to customers.

Isha has informed Corey that the annual service on the cookers, bakers’ ovens and specialcooking equipment is due three days before the completion of the contract and that she willhonour this commitment. The day after making this promise Isha cancels the service and spends the £800 on a luxury holiday. Not having had a service, initially the cookers were not working to full capacity, but Corey has had them repaired and they are now operating well.

Question 3

Advise Corey as to any potential action he might have for misrepresentation. He is considering diversifying his business away from café food for corporations and so does not want to give up the premises.

QUESTION 3

Is the doctrine of privity obsolete, following the passing of the Contracts (Rights of Third Parties) Act 1999?

Discuss.

QUESTION 4

Asaf, as president of his local basketball club, hires a coach from the Coolers Coach Co. (CCC) to take 25 members of the club to see the final of the Men’s Basketball Championships, held in London.

A term of the contract provides: ‘This contract may be cancelled, provided that notice of five working days is given to the company, otherwise the full hire charge is payable.’ The contractual price is £1,700 and Asaf pays a deposit of £300 in advance. As CCC guarantees the roadworthiness of all of its coaches, the designated coach is properly serviced the day before its intended use.

However, on the morning of the trip it is announced that none of the basketball matches will be played, as anti-sports demonstrators have caused severe damage to the basketball courts.

Asaf immediately claims that the contract has been frustrated and demands the return of the £300 deposit.

Advise the parties, with specific reference to the doctrine of frustration.

QUESTION 5

Examine the impact of RBS v Etridge (No. 2) [2001] UKHL 44 on the doctrine of undue influence. In your answer state briefly how undue influence differs from economic duress.

QUESTION 6

Filip Nowak designs and makes individually crafted metallic fish sculptures. They retail for anaverage price of £500 and are marketed through independent galleries and through Filip’s own internet site.

Filip receives an email from a company called Filip presumes that the company is part of the Luxury Living Magazine group, which have generated a lot of publicity and business in the past.

Offers to purchase all Filip’s current stock for their stall in the Luxury Living Show. The email includes an attachment where Jamal is featuredon the front of what appears to be Luxury Living magazine. They also say they will promoteFilip’s work in their forthcoming publication. They ask Filip to attend on the day to help exhibit his work to best effect and take part in a publicity shoot. Filip agrees to this. The day before the show, the [email protected] team arrive at Filip’s premises with a truck into which they load his stock.

Filip is told that a woman called Tara will drive him to the show. Tara gives him an official - looking Luxury Living Show pass with his name on it.

Tara drops Filip at the front of the show centre and goes to find a parking space. When Filip tries to enter the exhibition, he is told that The Luxury Living Show has never heard of, Filip Nowak or any photo shoot scheduled for the day.

Filip later traces a large amount of his stock to a shop called ‘Must-Haves’. Melinda, the owner of the shop, made the purchases in good faith from a man called Jamal, who said he was the artist. She paid Jamal £50,000 for the stock.

In addition, it is discovered that Jamal on the front cover of Luxury Living Magazine was just a ‘mock – up’.

Advise Filip whether, under the doctrine of unilateral mistake as to identity and the decision in Shogun Finance Ltd v Hudson [2003] UKHL 62, he could have the contract

between himself and [email protected] set aside and recover the goods from Melinda/ ‘MustHaves’.

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