THIS PAPER IS NOT TO BE REMOVED FROM THE EXAMINATION HALLS

UNIVERSITY OF LONDON LA1040 ZA

DIPLOMA IN LAW/CertHE COMMON LAW

LLB
DIPLOMA IN THE COMMON LAW
BSc DEGREES WITH LAW

Contract law

Friday 26 May 2017: 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
Student are permitted to bring into the examination room the following specified
document: one copy of Blackstone’s Statutes on Contract, Tort & Restitution
(OUP).

© University of London 2017

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1. Adele and Bella are sisters. On 1st February Adele meets her sister for
a drink and tells her she is looking for a new sports car. Bella replies that
she wants to sell her red Ferrari as there is now a better model available
and that she is happy to sell it to her sister “on a business basis”. Bella
says she wants “about £100,000” for it. That evening Adele sends an
email to Bella saying, “I accept your offer to sell the car for £100,000 and
will transfer the money in a few days.” On 3rd February Bella sends
Adele an email that says: “Don't be stupid I wouldn’t sell the car for that,
I want £125,000 for it. To avoid any further misunderstanding, do not
email me again unless you do not want the car at this price.” Adele was
so annoyed on reading the first sentence of Bella’s email that she
deleted it without reading further and did not reply. Three weeks later
Bella rang Adele and demanded £125,000, offering to deliver the car.

Advise Adele.

How, if at all, would your answer differ if, upon reading Bella’s email on
3rd February, Adele decided to purchase the car for £125,000 and Bella
now refuses to deliver it?

2. Discuss TWO of the following statements:

(a) Frustration can never be self-induced.

(b) To revoke a unilateral offer the offeree must receive actual

notice of the revocation.

(c) Damages for breach of contract are never based upon the gain
made by the party in breach.

(d) Specific performance is never available when such a remedy

would require the ‘constant supervision’ of the court.

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3. Devi is a self-employed dress designer. Her old computer breaks down
just as she is completing a design sketch to send to a client. She
rushes to Office Supplies to buy a new computer to use in her
business. She decides to buy a new desk top computer for £2,000. She
asks Erich, the sales assistant, if it is a good computer and whether it
will run specified software which is used for clothes design. Erich says
that all computers sold are tested in store before being put on the shelf
for sale and that he knows it will run the specified software. Devi signs
an agreement to purchase the new computer which contains the
following terms:

1 Office Supplies will not in any circumstances be liable for

physical injury caused by its products.

2 Office Supplies will not be liable for any damage to

property caused by its products.

3 Any other liability of Office Supplies resulting from the

sale of defective goods shall be limited to ten times the
value of the goods sold.

As Devi leaves the store she passes and reads a large sign that says:

‘We sell computers at the lowest possible price and so all goods
sold in this shop are sold without any warranty as to quality.’

When she gets back to her office she finds the computer will not run
the specified software. When she returns to the office the next morning
she sees that the computer is overheating. As she approaches, it
explodes and burns her arm and expensive cashmere coat. She also
suffers some loss of business while she locates a replacement
computer.

Advise Devi.

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4. Prince Felix wants to improve his Palace grounds for his grandchildren.
He decides to build a large swimming pool and a small fairground.

Prince Felix entered into a contract with Greta to build the swimming pool
for £1 million payable on completion. The contract provides for
completion of the swimming pool by 1st March.

Prince Felix entered into a contract with Hans to build the fairground for
£9 million payable in three equal instalments: on signing the contract, on
the commencement of work and on completion. The contract provides
for the completion of the fairground by 1st October.

When work commences on the swimming pool Greta encounters

harder ground than she anticipated and demands an extra £100,000 to
cover her increased costs. Prince Felix cannot find any other builder
with the expertise to complete the contract on time and so agrees
without protest so that the pool will be completed in time for his
granddaughter Elsa’s birthday celebrations. On completion of the
swimming pool on 1st March Prince Felix refuses to pay Greta any
more than £1 million.

Prince Felix pays Hans the first and second payments as required by
the contract. Prince Felix’s palace then suffers extensive damage in a
fire which will be costly to repair. Consequently he tells Hans that he
will not be able to make the final payment and so Hans offers to reduce
it by one third to £2 million. Hans then regrets agreeing to reduce the
final instalment and demands the original amount offering Prince Felix
an extra three months to find the money.

Advise Prince Felix as to his possible rights and liabilities.

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5. Colin is the Manager of the Barton Bulldogs, a second division football
club. He has three ‘star’ players: Lionel, Pepe and Mario.

In June Colin calls Romeo, the owner of Neverton, a Premier League

football club. He tells him all three players are for sale. He describes
Lionel as being at ‘the top of his game’ and having ‘the finest ball skills
of his generation’, he says that Pepe is ‘in superb condition’ and that
Mario is ‘utterly dependable’. Romeo immediately offers to buy Lionel
for £20M. Romeo does not know much about Mario but offers to buy
him as Colin ‘only’ wants £5M for him. Colin immediately accepts both
offers.

Romeo takes a month’s holiday on his yacht where he cuts himself off
from all news. Consequently he does not hear that Pepe was involved
in a car accident and suffered leg injuries. Romeo’s first act on
returning to the UK is to ring Colin and offer £10M for Pepe which Colin
quickly accepts. Romeo soon learns about the car accident and is
furious.

When Lionel starts training with Neverton it becomes clear that he has
a ‘balance problem’. This condition was disclosed in a medical
questionnaire which Lionel completed and which was sent to Romeo
(but which he never read) when Romeo had previously enquired about
purchasing Lionel. Further, it is discovered that Mario has a long
standing drink problem and so often misses training at Neverton as he
regularly did when he was at Barton Bulldogs.

Romeo seeks your advice as to what remedies for misrepresentation

he may be entitled to in respect of the purchase of Lionel, Pepe and
Mario. He also asks what the consequences would be if he were to
resolve Mario’s drink problems over the forthcoming season before
taking any action for misrepresentation.

6. ‘It is difficult to state clearly, and harder to defend, the law relating to
the effect upon any agreement of a mistake of identity.’

Discuss.

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7. Sarki is a generous and wealthy art collector. Advise him in all the
following alternative circumstances:

(a) After his favourite picture, “Van Gogh’s Missing Ear”, is stolen
Sarki offers a reward for its return. Inspector Maigret, a
policeman working on the theft, locates the picture and claims
the reward.

(b) After the theft of “Painting of a Sunflower”, Poirot, a private

investigator, is employed by the insurer of the picture to recover
the picture. Poirot locates the picture and claims the reward.

(c) After reading in a newspaper about Rose a 19-year-old genius,

who has just completed her PhD, Sarki writes to her and promises
her £1,000 for working so hard over the past year.

(d) As (c) except that Sarki had also contacted Rose when she was
18 urging her to work hard.

(e) Sarki tells Jane, the butler, that she can use his car for a rent of
£1 per month.

8. ‘The Contracts (Rights of Third Parties) Act 1999 made a fundamental

change to English Contract Law.’ (E McKendrick)

Discuss to what extent the above statement is true and whether any
change made has improved the law.

END OF PAPER

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