LA1040 October ZA

Contract law

Monday 12 October 2020

You will have TWO HOURS AND 45 MINUTES in which to answer the
questions, including 15 minutes reading time. You must answer all parts of a
question unless otherwise stated.

You will have an additional 30 minutes to download the examination paper and
to upload your saved answers to the VLE; this time should be used solely for
these purposes.

You must answer TWO of the following EIGHT questions.

© University of London 2020

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1. Ronald has decided to sell his electric guitar. On 1st August he places
an advert in the online magazine “Music Maker” stating, “Rare Yamaha
guitar for sale, purple finish. Willing to accept offers of around £2,000 if
received by 10th August”. The advert also has Ronald’s contact details,
including his home address, e-mail and mobile phone number.

Trevor sees the advert on the magazine’s website. He is interested in

the guitar, and e-mails Ronald on 4th August to ask whether the colour
of the guitar is a deep purple or a lilac. He says that if it is deep purple
he would be “minded to pay £1,800, subject to inspecting it first”. Ronald
replies that the guitar is indeed a deep purple colour.

Debbie sees the advert and calls Ronald on his mobile phone on 5 th
August, stating that she will give Ronald £1,500 for the guitar. Ronald
replies that he is happy to sell for this amount. Unfortunately, Debbie
does not hear due to background noise, and she is about to ask Ronald
to repeat what he had said when Ronald’s mobile phone runs out of
battery and they are cut-off.

On 6th August, Ronald is having lunch with his brother, Harry. He

mentions to Harry that he has just sold his guitar. Harry is furious
because Ronald had promised to sell him the guitar last week for £500.
Ronald feels bad for upsetting his brother and tells him that the guitar is
his for £500. Ronald also telephones Debbie to tell her he has changed
his mind. Debbie’s partner, Matilda, answers the telephone and Ronald
asks her to pass on the message that the guitar is no longer for sale.
When Debbie hears the news, she visits “Music Maker’s” website and
notices that Ronald’s advert is still showing. She immediately sends a
text message to Ronald stating, “I trust our sale for £1,500 is all fine. If I
don’t hear otherwise, I will come and collect it tomorrow”.

On his way home from lunch, Ronald checks his emails on his
smartphone and reads an email from Emily stating, “I’ve been looking
for a purple Yamaha for ages. Please accept my offer of £2,200”. Ronald
is delighted and sends back an email telling Emily that she can come
and collect the guitar that afternoon.

Advise Ronald.

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2. Ruth is a metal worker involved in the following events:

(a) She contracts to repair the local church bells for £10,000. When
she begins repairing them she discovers that there are voids in
the bells that were not previously discoverable. She tells the vicar
that the extra work involved will cost her an extra £5,000. The
vicar reluctantly agrees to pay this and holds a sponsored hymn
singing to raise the extra money.

(b) The fence around the local Dog Rescue Kennels has blown down
and needs £500 worth of repair work. Ruth agrees to do the work
for the cost of the materials only which is £50.

(c) Ruth contracts with Lady Godiva to make a new set of gates for
her Manor House. The design and price of £5,000 are agreed.
Ruth likes Lady Godiva and so adds Lady Godiva’s family crest
to the design. Before the gates are delivered Lady Godiva pays
Ruth £5,000. However, when she sees the gates she is very
pleased with the crest and rings Ruth to promise her an extra
£500.

(d) Lord Bulldog rears pheasants on his estate which are then shot
by paying guests. Lord Bulldog asks Ruth to repair the cages in
which the pheasants are reared. She estimates the work needed
at about £200. However, she dislikes Lord Bulldog and does not
approve of shooting as a sport so tells him she will do it for £2,000
to which Lord Bulldog agrees.

Having completed all the work above, the Vicar refuses to pay the extra
£5,000 when his sponsored hymn singing only raises £5. Ruth regrets
her generosity towards the local Dog Rescue Kennels and demands that
they pay the “proper” price for the job and not just £50. Lady Godiva also
now regrets promising to pay extra to Ruth and declines to do so and
Lord Bulldog, having discovered the true cost of the work, now refuses
to pay any more than £200.

Advise Ruth.

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3. Felicity is looking to rent some business premises for her new vegan
restaurant, Delicioso. Health Direct, a fitness and sports company, has
advertised retail space available for rent within one of their fitness
centres. Felicity reads the advertisement which states: “A chance to rent
this superb restaurant space and serve the most health-conscious
consumers in the country. The huge numbers of visitors that use our
fitness facilities guarantee that you will be serving at least 1,000
customers every day!”.

Despite the fact that the rental charges are above market value, Felicity
is keen to rent the restaurant space at Health Direct since the predicted
customer numbers are so high. Further, she has conducted some
internet searches and believes that there are no other restaurants
operating in the near vicinity. She decides to contract with Health Direct.

Unfortunately, six months after contracting, Felicity is in severe financial

difficulties owing to disappointing customer numbers that have never
exceeded 50 per day. Felicity discovers that the visitors to Health Direct
started falling dramatically seven months ago when Health Direct gave
notice that they would be closing down their swimming pool. To make
matters worse, she discovers that there is an unhealthy fast food
restaurant just one mile away where the remaining visitors to Health
Direct prefer to eat. Felicity wishes she had instead opened her
restaurant at Fine Fitness Ltd where customer numbers vastly exceed
those at Health Direct.

Advise Felicity.

4. ‘Historically the courts have always been hostile towards exclusion

clauses using many different techniques and devices to control their use.
Such indirect control is now no longer necessary as the courts can
regulate their use by reliance upon statutory provisions.’

Discuss.

5. ‘It is becoming increasingly difficult to justify the Courts’ interpretation of

section 2(1) of the Misrepresentation Act 1967. Victims of an actionable
misrepresentation are treated far too favourably, and the nature of the
misrepresentation and its effect on the victim seem of little concern.’

Discuss.

6. ‘The law on restraint of trade seeks to achieve a balance between the

rights of parties to include in their contracts whatever protections they
think appropriate and the so-called public interest. The problem is that
this public interest is difficult to define.’

Discuss.

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7. (a) Explain the concept of “self-induced” frustration by reference to
decided cases.

(b) In January Miranda books a cruise on the Halcyon, a new cruise

ship, for £5,000 for August the same year. Miranda pays a deposit
of £2,000 on booking. Advise Miranda in each of the following
alternative situations:

(i) On 30th July the Halcyon is destroyed by fire. The owners

had spent £50 per passenger valeting the cabins ready for
the following week’s cruise.

(ii) Following unexpected hostilities in the Middle East in

February the cost of ship’s fuel increases by 300%. The
Halycyon’s owners tell Miranda that the contract for the
cruise ‘has been frustrated’.

8. Peter has recently won some money on the lottery and decides to have
a sand tennis court built in the garden of his country home. He contracts
with Top Tennis Ltd to construct the court for £20,000. He specifically
asks that Top Tennis Ltd use a terracotta sand since it replicates exactly
the aesthetic of a clay court. In his youth, Peter had been a semi-
professional clay court tennis player and the terracotta sand allows him
to relive enjoyable memories of his clay court tennis days. However, on
completion of the court, Peter discovers that Top Tennis Ltd has used a
yellow, rather than terracotta, sand, meaning that the court bears little
resemblance to a clay court. Peter wants Top Tennis Ltd to replace the
yellow sand with terracotta sand despite being told that it will cost
£22,000 to do so. The tennis court is no less valuable with yellow sand
than with terracotta sand.

Peter also contracts with WaterWorld to build an outdoor salt-water

swimming pool. When the pool is completed, Peter notices that
WaterWorld has installed floor tiles that are incompatible with salt- water.
Before contacting WaterWorld, however, Peter goes on holiday for one
month. When he returns, all the tiles have cracked and the debris has
damaged the pumping system.

Advise Peter.

END OF PAPER

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