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UNIVERSITY OF LONDON LA1040 October

DIPLOMA IN LAW/CertHE COMMON LAW

LLB
DIPLOMA IN THE COMMON LAW
BSc DEGREES WITH LAW

Contract law

Monday 23 October 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. Harjot contracted to pay David £10,000 to build a conservatory in her
garden. The terms were very clear that the floor should be of real oak.
David began to build the conservatory and when he had nearly
completed the work he discovered that due to a shortage of oak the cost
had increased by £2,000. This meant that he would not make any profit.
He told Harjot that unless she paid him an extra £2,000 he would not be
able to complete the conservatory and she would have to get another
builder to do it. Harjot was furious but as she needed the conservatory
ready for her daughter’s wedding she agreed. David has completed the
work, and the conservatory looks lovely in the wedding photos, just how
Harjot had imagined. Harjot is now refusing to pay the extra £2,000.

David’s nephew, Leon, wanted to become a carpenter and so had

helped David in laying the floor. David was so delighted with Leon’s
work that at the end of the job he promised to pay Leon £200.

Advise David if he is entitled to the £2,000 and if he must pay Leon

£200.

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2. Cristal decided to convert her cellar into a playroom. After looking at
many building companies she settled on BasementsRu, a national
company with a very good reputation. Their brochure said that ‘top of the
range materials were used in a tailored design for your cellar’. Cristal
was delighted at this as she was hoping to use the room as a background
for a photoshoot.

Brenda, the owner of BasementsRu, arrived to take measurements.

Cristal specified that she only wanted sustainable wood to be used for
the floor and ecological materials for the insulation as she was a well-
known environmentalist and wanted to maintain her reputation as such.
The contract stated that the floor area would be 24 square metres and
the total cost was to be £40,000. A television company, ITV, agreed to
make a documentary about Cristal’s cellar conversion, from which she
hopes to make £50,000.

Cristal was at first pleased with the cellar but soon discovered that her
especially designed furniture did not fit as the floor area was in fact 22
square metres. By making the area slightly smaller BasementsRu
had been able to use standard panels and saved themselves £10,000.

Cristal also discovers that the floor and insulation are not made from
ecologically sustainable sources. Although they make no difference to
the use of the playroom it would damage Cristal’s environmental
reputation if this was discovered. As well as her reputation she is very
upset at the thought of such material in her home. ITV has now refused
to finish the documentary.

Cristal wants the work completely redone, according to the agreed

specification. Brenda is refusing as this would cost £50,000. Cristal has
had a quote from EasyBasements for £60,000 to completely redo the
cellar.

Cristal is refusing to pay Brenda and has engaged EasyBasements to

do the work in the hope of ITV restarting their documentary.

Advise Cristal.

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3. Whilst on holiday in Norfolk, Chrithi sees a sign ‘Exciting Pig Farming
Opportunity’ and she calls the owner, Quentin, to arrange a visit to the
farm.

When Chrithi arrives, she is impressed to see that there are lots of
visitors to see the new piglets and to pet the small goats and ponies that
Quentin also keeps. She says to Quentin that she thinks the many
visitors would be a good source of income. Quentin does not respond to
this.

As they walk around the farm, she asks how much profit it makes.
Quentin states, ‘Last month it made £10,000. Do you want to check the
accounts?’. Chrithi is very impressed with this and says that she does
not really understand figures. Quentin tells her that he will soon be
buying a family of ‘Pigmy Piggies’ and that this breed of pig is popular as
pets amongst the rich and famous. Chrithi is delighted as selling the pigs
as pets would provide an opportunity to develop the business.

She asks her brother Xavier to look at the farm’s accounts. Xavier
pops in one day and has a quick look at the accounts and confirms that
last month there was a profit of £10,000. Had he looked more closely
he would have seen that this was due to Quentin renting out part of the
farm to a film crew. Usually the monthly profit was £1,000.

A few months later Chrithi purchases the farm for £200,000. This is
slightly more than another farm that Chrithi had been looking at, which
cost £150,000 but she thinks it is worth the extra due to the pet pig
opportunity.

She discovers that Quentin did not buy the ‘Pigmy Piggies’. This was
because he was denied a licence to import them two weeks after
Chrithi’s visit. She also discovers that the farm does not have any small
ponies and goats, as they belonged to Quentin and he has taken them
with him. So there are few visitors to the farm.

Chrithi finds that her inexperience and the lack of other income
means that she is making a loss of £2,000 a month. She has also
found out that the other farm has been purchased by another
inexperienced farmer but is making a profit of £4,000 a month.

Advise Chrithi on any claims she may have against Quentin.

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4. ‘The case for recognising a contract for the benefit of a third party is
simple and straightforward...The law of contract should give effect to
the reasonable expectations of contracting parties...[b]ut there is no
doctrinal, logical or policy reason why the law should deny
effectiveness to a contract for the benefit of a third party where that is
the expressed intention of the parties...They rely on the contract. It is
therefore unjust to deny effectiveness to such a contract.’ Steyn LJ
in Darlington BC v Wiltshier Northern Ltd (1995).

Discuss.

UL17/0976
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5. Jack ran a catering business which was under financial pressure due to
an economic recession. He owed a great deal of money to Bert. Jack
was approached by Bert who said that he had 100 bags of bulgur wheat
that he wanted Jack to buy for £1,000. This was more than Jack would
normally pay but bulgur wheat was very hard to get hold of and it would
help Jack diversify his product range. Jack pretended that he was
unwilling to buy the wheat. Seeing Jack’s reluctance, Bert said that
unless Jack bought the wheat Bert would smash Jack’s car windows. At
this Jack quickly agreed to buy the wheat.

Jack was married to Gloria and they lived in Oak House. Gloria was the
sole legal owner of the house which she had inherited from her mother.
Jack had been married to Gloria for 15 years, and she had always
supported his many (failed) business ventures. She believed totally in
his dreams and trusted his business decisions. Jack had approached
HSBD bank for a £350,000 loan so he could expand his business but
they would not give him the loan unless he could secure the debt.
Although Gloria was reluctant to enter into the guarantee agreement, as
she wanted to be sure she and her children always had a home, she did
not want to upset Jack and so she agreed to speak to the bank manager,
Fred.

Jack and Gloria met with Fred, who chatted to Gloria about the business
and asked after the children. He explained that the guarantee she was
entering into would also mean that Jack’s existing overdraft could be
extended. Confused about all the numbers, Gloria signed the guarantee
for Jack’s loan and was glad the meeting was over.

Jack has not kept up the payments on his loan and the bank is now
seeking to enforce the guarantee against Gloria, which means she will
have to sell Oak House. Jack has also refused to pay for the bulgur
wheat and Bert is going to sue Jack for the money.

Discuss:

(a) whether Jack has a contractual obligation to pay for the bulgur
wheat; and

(b) whether Gloria may be required to sell Oak House.

6. ‘The distinction between inter praesentes and inter absentes unilateral

mistake is illogical in the modern era.’

Discuss.

UL17/0976
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7. On Thursday, Amina placed an advertisement, which included her home
address and telephone number, in the Daily Bugle: ‘Five hand crafted
lamps for sale, £20 each, call for further information’. Brijesh sees the
advertisement, calls the number and leaves a voicemail asking if the
lamps are made of wood because if they are he wants two of them.
Brijesh leaves his number for Amina to return his call and says that he
needs to hear by Saturday morning as he is going to an auction that day
for other lamps he is interested in. Amina does not hear the message
until Sunday.

On Friday, Charles telephones Amina and tells her that he will buy all
the lamps if she will take £90 for all five. Amina says that she will need
to think about this as she really wanted £100. Charles says that he will
not pay more than £90. Later that day Amina posts a letter to Charles to
confirm that she will sell them to him for £90. She then places a note in
her window to say that all the lamps have been sold.

Later on Friday, Drew calls around to Amina’s house to buy a lamp and
does not see the note. Amina tells Drew that he cannot have a lamp as
they are all sold.

The letter to Charles gets lost in the post and Amina does not hear from
Charles again.

Advise Amina.

8. ‘The Consumer Rights Act 2015 has increased the rights of consumers
against those who seek to exclude or limit liability for breach of
contract.’

Discuss.

END OF PAPER

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