ii_=mêÉJÉñ~ã=ìéÇ~íÉ=OMNT=

mêÉJÉñ~ã=ìéÇ~íÉ=OMNT=
i^NMQM=`çåíê~Åí=ä~ï=

`ìêêÉåí=ÉÇáíáçå=çÑ=íÜÉ=ãçÇìäÉ=ÖìáÇÉ=
The current edition of the module guide was published in 2016.

qÜÉ=ÑçääçïáåÖ=ÇÉîÉäçéãÉåíë=ëÜçìäÇ=ÄÉ=åçíÉÇ=
`Ü~éíÉê=OW=^ÖêÉÉãÉåíW=çÑÑÉê=~åÇ=~ÅÅÉéí~åÅÉ=
OKP=^ÅÅÉéí~åÅÉ=çÑ=íÜÉ=çÑÑÉê=
For a contract to be formed, there must be an acceptance of the offer.
The acceptance must be an agreement to each of the terms of the offer.
A communication which falls short of this e.g. by merely expressing
gratitude for ‘instructions’ will not constitute acceptance (Arcadis
Consulting v AMEC (BSC) [2016] EWHC 2509 (TCC).
See also Reveille Independent LLC v Anotech International (UK) Ltd
[2016] EWCA Civ 443 where it was held that a draft agreement was
accepted by subsequent conduct that sufficiently indicated assent to its
terms even though the draft expressly stated that it was only binding
when signed.

`Ü~éíÉê=PW=`çåëáÇÉê~íáçå=
PKN=`çåëáÇÉê~íáçå=
It was previously thought that Williams v Roffey had not affected the
related rule that part payment of a debt can never discharge the debtor
from the obligation to pay the balance – see Re Selectmove (1995).
However, in MWB Business Exchange Centres Ltd v Rock Advertising Ltd
[2016] EWCA Civ 553 the Court of Appeal held that a property owner
was bound by an oral agreement with the occupier who had failed to
make payments (as provided by the parties’ original written
agreement) to accept a late payment and a revised schedule of further
payments. It was said that the subsequent agreement conferred
practical benefits upon the land owner who recovered some of the
arrears immediately and benefitted because the premises would not
now be left empty for a period. Arden LJ alone characterised the
subsequent agreement as a ‘collateral unilateral contract’. It was
collateral because it was distinct from the original licence to occupy the
premises agreed between the parties; it was unilateral because, so long
as the licensee did an act, i.e. occupied the premises and paid the
renegotiated fees, the land owner would be bound by his promise to
accept the deferral of the arrears.

N
 i^NMQM=bäÉãÉåíë=çÑ=íÜÉ=ä~ï=çÑ=Åçåíê~Åí=

`Ü~éíÉê=QW=líÜÉê=Ñçêã~íáîÉ=êÉèìáêÉãÉåíëW=áåíÉåíáçåI=ÅÉêí~áåíó=~åÇ=
ÅçãéäÉíÉåÉëë==
QKO=`Éêí~áåíó=çÑ=íÉêãë=~åÇ=î~ÖìÉåÉëë=
It is not possible to turn an incomplete bargain into a legally binding
contract by merely adding together express and implied terms. Rather
a complete bargain must exist which may be supplemented by further
implied terms Wells v Devani [2016] EWCA Civ 1106.

`Ü~éíÉê=SW=qÜÉ=êÉÖìä~íáçå=çÑ=íÜÉ=íÉêãë=çÑ=íÜÉ=Åçåíê~Åí=
SKOKN=qÜÉ=`çåëìãÉê=oáÖÜíë=^Åí=OMNR=
båÑçêÅÉãÉåí=
The CRA 2015, like the Regulations it supersedes, both makes an
‘unfair’ term unenforceable in individual cases and also permits certain
‘regulators’ to take action against the use of such terms. We have seen
that several of the important cases on the Regulations were brought by
the Office of Fair Trading (OFT). The OFT was closed in 2014 pursuant
to the Government’s policy of reducing the number of ‘quasi
governmental’ bodies, or quangos. The successor to the OFT’s powers
of intervention and enforcement is now the Competition and Markets
Authority. Actions brought by such bodies may have wide market
effects. In an action brought by an Austrian consumer organisation,
Verein für Konsumenteninformation v Amazon EU Sàrl (Case C-191/15)
the European Court of Justice held that a clause in Amazon’s standard
terms and conditions was unfair because it failed to alert the purchaser
that private international law principles do not allow the exclusion of
certain important principles of otherwise applicable national law.

`Ü~éíÉê=VW=jáëêÉéêÉëÉåí~íáçå=
VKNKO=rå~ãÄáÖìçìë=Ñ~äëÉ=ëí~íÉãÉåí=çÑ=ÉñáëíáåÖ=Ñ~Åí=çê=ä~ï=ïÜáÅÜ=
áåÇìÅÉë=~=Åçåíê~Åí=
pí~íÉãÉåí=
Recent cases have contained discussions of the desirability of a more
general duty upon contractors to act in good faith extending beyond
the negotiation of a contract. Leggatt J has been an enthusiastic
supporter (Yam Seng Pte Ltd v International Trade Corp Ltd [2013]
EWHC 111 and Novus Aviation Ltd v Alubaf Arab International Bank
BSC(c) [2016] EWHC 1575 (Comm)), though this enthusiasm has not
been echoed in recent appellate decisions (Mid Essex Hospital Services
NHS Trust v Compass Group UK and Ireland Ltd [2013] EWCA Civ 200
and MSC Mediterranean Shipping Company SA v Cottonex Anstalt
[2016] EWCA Civ 789). See also Monde Petroleum SA v Westernzagros
Ltd [2016] EWHC 1472 (Comm) holding that an express right to
terminate a contract did not need to be exercised in good faith.

VKOKN=oÉëÅáëëáçå=
It has recently been suggested that the time at which the representee
became aware of the existence of the right to rescind for
misrepresentation may affect the operation of this bar to rescission Salt
v Stratstone Specialist Ltd [2015] EWCA Civ 745.

O
 ii_=mêÉJÉñ~ã=ìéÇ~íÉ=OMNT=

VKOKO=a~ã~ÖÉë=
Section 2(2) of the Misrepresentation Act provides a discretion for a
court to award damages in lieu of rescission, where it is adjudged
equitable to do so, taking account of the effect of rescission on both
parties. The most natural interpretation of the language of s.2(2),
however, suggests that damages may only be awarded under s.2(2) ‘in
lieu of rescission’ when, at the time of award, there is a subsisting right
to rescission. In other words, such damages are unavailable where
there was once a past right to rescind but which right had subsequently
been lost because one of the so called ‘bars’ to rescission i.e.
affirmation, lapse of time, the impossibility of restitution or the
intervention of third-party rights (see 9.2.1 above). This interpretation
was supported by the Court of Appeal in Salt v Stratstone Specialist Ltd
[2015] EWCA Civ 745 thus resolving a longstanding conflict between
several first instance decisions on this point.

`Ü~éíÉê=NNW=qÜáêÇ=é~êíáÉë=
NNKO=qÜÉ=`çåíê~Åíë=EoáÖÜíë=çÑ=qÜáêÇ=m~êíáÉëF=^Åí=NVVV=
The application of s.1(3) of the Act was considered in Avraamides v
Colwill (2006). The Court of Appeal held that the s.1(3) requirement of
express identification was not satisfied where A had undertaken to ‘pay
any liabilities properly incurred by B’. C, to whom the now insolvent B
had a liability, could not bring an action against A under the 1999 Act
because C was not expressly identified. In contrast, in The Alexandros
T, Starlight Shipping Co v Alliannz Marine and Aviation Versicherungs
AG [2014] EWHC 3068 (Comm) a settlement agreement between the
insurers (called ‘underwriters’) and owners of a ship included a
promise by the shipowners not to sue named insurers. When the
shipowner sued the insurer’s solicitor and loss adjuster it was held that,
properly interpreted, the reference to ‘underwriters’ included their
servants and employees and so the solicitors and loss adjusters were
sufficiently identified to bring an action under the 1999 Act.

`Ü~éíÉê=NOW=fääÉÖ~äáíó=
fåíêçÇìÅíáçå=
In the important recent case of Patel v Mirza [2016] 3 WLR 399 a
Supreme Court comprised of nine justices took the opportunity to
review this area of law which they noted had ‘caused a good deal of
uncertainty, complexity and sometimes inconsistency’. For this reason,
the case is of considerable importance and so is discussed in some
detail.
 In a number of recent cases before the Supreme Court two
distinct approaches had emerged between on the one hand a
policy-driven approach to each individual case and on the other
‘a clear cut test’ of enforceability the application of which,
although sometimes arbitrary, is commendably certain. The
majority of the justices (Lords Toulson, Kerr, Wilson and Hodge
as well as Lady Hale) identified two broad policy reasons for
the retention of a defence of illegality that: a person should not
be allowed to profit from his own wrongdoing and that the law
should be coherent and not self-defeating. More particularly,

P
 i^NMQM=bäÉãÉåíë=çÑ=íÜÉ=ä~ï=çÑ=Åçåíê~Åí=

the underlying rationale was the maintenance of the integrity

of the legal system and perhaps also some aspects of public
morality. The broad effect was to remove conflicting rules,
maxims and presumptions and replace them with a single
policy-based enquiry as to whether the enforcement of a claim
would injure the integrity of the legal system. This single
judgment was, however, multifactorial and Lord Toulson who
delivered the leading judgment endorsed a helpful list of
factors identified in academic writing including:
 How seriously illegal or contrary to public policy the conduct
was;
 Whether the party seeking enforcement knew of, or intended,
the conduct;
 How central to the contract or its performance the conduct
was;
 How serious a sanction the denial of performance is for the
party seeking enforcement;
 Whether denying enforcement will further the purpose of the
rule which the conduct has infringed;
 Whether denying enforcement will act as a deterrent to conduct
that is illegal or contrary to public policy;
 Whether denying enforcement will ensure that the party
seeking enforcement does not profit from the conduct;
 Whether denying enforcement will avoid inconsistency in the
law thereby maintaining the integrity of the legal system.
But also adding:
 The seriousness of the conduct, its centrality to the contract,
whether it was intentional and whether there was a marked
disparity in the parties’ respective culpability.
The facts of Patel v Mirza (2016) were simple. Patel paid £620,000 to
Mirza to gamble on the movement of shares in a bank on the basis of
inside information. When that intelligence was not forthcoming, Patel
tried to reclaim his money from Mirza. All nine justices agreed that
Patel was entitled to the return of his money, the majority on the basis
that the enforcement of Patel’s claim would not undermine the
integrity of the legal system and the minority on the basis of a
narrower rule-based approach.
This decision of the Supreme Court has not yet been incorporated in
many textbooks. Further, different writers use different classifications.
For this reason, it is recommended that, if you find yourself struggling
with one author’s account of the subject, you first check whether the
author has taken account of the Supreme Court’s decision in Patel v
Mirza (2016) and then, making allowance for this, persevere as much
as you can before reading another account. The reason is that, if a
particular aspect of one author’s analysis of the topic confuses you, it is
not always easy to simply read a different account of that aspect
written by another author who might have classified the whole topic
very differently. In this respect, the topic of illegality is similar to that
of mistake which was discussed in Chapter 8.

Q
 ii_=mêÉJÉñ~ã=ìéÇ~íÉ=OMNT=

The exact status of much of the old case law is now in doubt in light of
the approach of the majority in Patel v Mirza (2016). It is likely that
the older cases will continue to provide guidance as to the application
of the individual factors identified as relevant by the majority of the
justices in Patel v Mirza. The exception to this are the House of Lord’s
decision in Tinsley v Milligan (1994) and the Court of Appeal case of
Bowmakers Ltd v Barnet Instruments (1945) which were respectively
not followed and disapproved.

`Ü~éíÉê=NRW=cêìëíê~íáçå=
NRKO=qÜÉ=å~íìêÉ=çÑ=ÚÑêìëíê~íáåÖ=ÉîÉåíÛ=
In MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2016]
EWCA Civ 789 the Court of Appeal recognised that the application of
the ‘radical difference’ test for frustration ‘may be arbitrary but it is
pragmatic’.

`Ü~éíÉê=NSW=a~ã~ÖÉë=
NSKN=qÜÉ=éìêéçëÉ=çÑ=~å=~ï~êÇ=çÑ=Ç~ã~ÖÉë=
The overriding compensatory aim of damages for actual, as well as for
anticipatory, breach of contract (for the distinction see 14.2 and 14.4)
was reaffirmed recently by the Supreme Court in Bunge SA v Nidera BV
[2015] UKSC 43.

NSKR=oÉãçíÉåÉëë=çÑ=Ç~ã~ÖÉ=
The reasoning of Lord Reid in Heron II was applied by the Court of
Appeal in Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146
to hold that where there exists concurrent negligence-based liability in
contract and tort the (less generous to recovery) contractual test will
also apply to the claim in tort. This is justified because, in the situation
of concurrent liability, although there exists a claim in tort, it is not one
between strangers.