UCL FACULTY OF LAWS

CONTRACT TUTORIALS
2009/10

Summary:

1. Weeks 7 & 8 Introductory Tutorial

2. Weeks 9 &10 Offer and Acceptance
3. Week 11 Reading Week (no tutorials)

4. Weeks 12 & 13 Consideration

Weeks 14 & 15 Promissory Estoppel

Weeks 16 Mistake & Misrepresentation
5. Week 20 Mid-sessional Examination
Week 21 Mistake & Misrepresentation
 Tutorial 1
INTRODUCTORY TUTORIAL

Contract: ‘An agreement between competent persons, upon

legal consideration, to do or abstain from doing some act’ or
‘an agreement enforceable at law.’ However, there is no
formal definition for contract in English law.
Freedom of contract: Everyone has the freedom to enter a
contract on their terms and to break the contract in certain
context.
The courts will intervene when there is an unequal bargaining
power. They like to uphold contracts in the interest of
certainty.
Things will always be examined objectively.
Only the parties in a contract may sue in it unless they fall
under the exceptions outlined in the Third parties act 1999.
Tutor’s e-mail: [email protected]
Make sure I do the problem every week! (aswell as the
discussion)
Reading:
Mckendrick Text and Materials: ch.1
Mckendrick: “English Contract Law: A Rich Past, an Uncertain Future”
[1997] Current Legal Problems 25

In the tutorial, we will discuss the following issues. Please make sure you
have thought about the following issues before you come to the class:

1. Techniques for reading and tutorial preparation.

2. When did YOU last make a contract?

Please identify recent occasions on which you have entered a contract. At

the beginning of the tutorial each person will briefly describe their contract.
Ordered some goods from a website. They offered to sell the goods for a
certain price I accepted by electronic means. This is a bilateral contract, I
am bound to pay the agreed price and the company are bound to deliver
the goods to me.
I bought McKendrick from a second year. She offered to sell the book, we
negotiated a price, I mae a counter offer and then she accepted. She
agreed to sell the book I agreed to pay. Contract complete.

3. Looking for Problems

Possible problems arising from my contracts: 1) Delivery time not agreed

upon. If goods are damaged in post who is liable? 2) Was this contract
intended to be legally binding in a court?

The Group will then discuss the problems that might arise from the
contracts described and go on to consider the potential practical problems
you would foresee at this stage (before studying the Law) if two companies
made the following arrangements:

Company A and Company B agree by exchanging letters that Company A

will deliver five tons of beans to Company B every month at a price of £100

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per ton. Deliveries will take place on 5th of each month and payment will be
made within 14 days after delivery of each month's beans.
Letters may not have arrived, there may be some confusion with
correspondence of this nature. If the 5th of the month is not a working day
arguments/complications may arise. If either party fails to fulfil their
obligations the consequences have not been discussed. What is the time
period for this agreement? Indefinite? One party may wish to withdraw from
the agreement at some point. Can they do this? Does the payment have to
be sent or received within 14 days? (electronic/other methods of payment
may take a few working days to process).

Do you think that the law should be involved in such arrangements?

Why?

Yes, such agreements were made with the intention that they would be
enforceable in court. Regulation of agreements is necessary. As we have
highlighted there are many problems so the law is needed for the purposes
of dispute resolution.

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 Tutorial 2
OFFER AND ACCEPTANCE

Reading:
McKendrick Text and Materials, pp.21-38 & Chapter 3.

Important Cases:
Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256
Gibson v Manchester City Council [1978] 1 WLR 520 (CA); [1979] 1 WLR
294 (HL)
Storer v Manchester City Council [1974] 1 WLR 1403
Pharmaceutical Society of GB v Boots [1953] 1 QB 101
Hyde v Wrench (1840) 49 ER 132
Stevenson Jacques & Co v McLean [1880] 5 QBD 346
Adams v Lindsell (1818) 1 B&Ald 681
Henthorn v Frazer [1892] 2 Ch. 27
Household Fire and Carriage Accident Insurance Co. Ltd. v Grant (1879) 4
ExD. 216
Holwell Securities v Hughes [1974] 1 ALL ER 161
Entores v Miles Far Eastern Corporation [1955] 2 ALL ER 493
Brinkibon Ltd. v Stahag Stahl [1983] AC 34
Errington v Errington [1952] 1 ALL ER 149
Routledge v Grant (1828) 4 Bing 653

Discussion:
1. Do you think that, if an offeror promises to keep an offer open for a
stated period, then that offeror should be held to that promise and
not allowed to retract the offer within that period? Is it possible for
an offeror to incur liability pending the acceptance of the offer?
2. What is the postal rule of acceptance? Does it have any merit?
Does it apply in respect of contracts concluded over the internet?
How do the rules of offer and acceptance apply in the case of
internet contracts? How far do you think the rules of Offer &
Acceptance are adequate for regulating transactions in a modern,
technologically developed society?
3. Is there a difference between silence and conduct when it comes
to acceptance? If so, what is the significance of the distinction?
4. What is a unilateral contract? How does it differ from a bilateral
contract and how does it work? Could the Carbolic Smoke Ball
Company have revoked its offer – if so, when and how?

Problem:
Try to work out which legal issues are raised by the facts and then apply
the relevant legal rules to them. There will be some areas of uncertainty
because the information you have is limited and some because there is
uncertainty about what the law is on the basis of the case law.

On 2nd October Galvatron PLC sends identical letters to three local firms
asking if they wish to buy an unused widget making machine that they have
acquired. The letters state that “the best offer received by 9.30am on 10th
October will secure the machine.”

The following day Prime PLC sends a fax saying: “Is it a 5XL model? If so
we will offer $5000, if not, $3000.” Unfortunately due to a transmission

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fault, the final ‘0’ is missing so that the last figure appears to be $300. The
machine is not a 5XL.

Optimus PLC sends a letter offering $2500 or $100 more than your highest
offer you receive under $3500.”

Megatron PLC sends a telex on the evening of the 9th October offering
$3500. The offer is received on Galvatron’s telex machine at 6pm on 9th
October, but not read until 10.30am on 10th October.

Advise Galvatron whether it is obliged to sell the widget making machine

and if so, to whom.

Further reading:
Treitel 12th ed: Ch 2.

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 Tutorial 3

CONSIDERATION AND INTENTION TO CREATE LEGAL

RELATIONS

Reading:
McKendrick Text and Materials chapter 5 (pp149-219) and chapter 7

Important cases:
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1
Pao On v Lau Yiu Long [1980] AC 614
Foakes v Beer (1884) 9 App Cas 605
In Re Selectmove Ltd [1995] 1 WLR 474.
South Caribbean Trading Ltd v Trafigura Beheer BV [2005] 1 Lloyds Rep
128
Balfour v. Balfour [1919] 2 K.B. 571
Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 All
ER 117

Discussion:
We will focus on the rules surrounding the concepts of consideration and
intention to create legal relations.

1. What does it mean to say that the courts will not assess the
adequacy of consideration? Is this the same thing as saying that
consideration need not have an economic value?
2. Can you explain why past consideration is not good consideration?
Do you agree with the rule? Are there exceptions?
3. Does the doctrine of intention to create legal relations add anything
to the need for consideration? First, explain (with reference to
decided cases) how that concept is applied by the courts and then
think about what it seeks to achieve. Is it a way of leaving power
relations within the family untouched by legal rules that apply to the
outside world? Who might gain or lose by such an approach?
4. Use the main cases referred to in the book and in your lecture
notes and handouts to support your answer to the following
problem question. First identify the legal issues that arise and then
decide which of the rules you have studied might be relevant:

Problem:
P.C. Plod rescues Mrs Cheshire’s cat from a tree. On his way home he
buys the Daily News and reads that Fifoot, an eccentric millionaire has
offered a reward of £10,000 to every policeman who rescues a cat. The
following day while on duty, he rescues Mr Furmston’s cat. Can he claim
anything from Fifoot for either or both of his rescues?

Further reading:
Treitel 12th ed: Ch 2 pp 74-106 & 135-141

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 Tutorial 4

PROMISSORY ESTOPPEL

Reading
McKendrick Text and Materials: chapter 5 (pp 219-252)

Important Cases:
Hughes v. Metropolitan Railway Co. (1877) 2 App. Cas. 439
Central London Property Trust v. High Trees House Ltd. [1947] K.B.130

Discussion
1. Did the development of promissory estoppel deal a severe blow to
the doctrine of consideration. If so, how severe? How firm is the
rule that promissory estoppel cannot be used as a sword? How
firm is the requirement that the promisee must not have behaved in
an inequitable manner (and what does this mean?)?

2. If it can be good consideration for a promise to pay more than the

contract price, should it also be good consideration for a creditor’s
promise to accept less than the amount of the debt in full
satisfaction?

3. Identify the full facts and decision in the High Trees case. What is
needed for a promise to operate as a promissory estoppel? What
are the limits on the effectiveness of such an obligation?

4. How has the idea of promissory estoppel developed since that

case?

5. How does estoppel work in the variation of existing contracts? How

is it affected by the case of Williams v Roffey?

Problem:
(a) Jeffrey is a tenant of Fragrant Ltd. He has a 10 year tenancy, which
started in 2002. Jeffrey normally pays his rent of £5,000 at the end of June.
In 2004, he asked the landlord to accept £4,500 at the end of each August
when his erratic earnings as a professional cricketer were at their peak.
Fragrant’s manager agreed and continued to accept the lower rent each
August. Jeffrey retired from cricket in 2007 and became a pupil barrister.
Fragrant’s new manager, Eric, issued proceedings on 1st July 2008 to evict
Jeffrey for failing to pay the 2008 rental payment. He also seeks to claim
back rent for the period 2004-7. Advise Jeffrey.

Could Fragrant serve notice to require the payment of future rent according
to the original agreement?

(b) Louise and Jasmin contracted to work as gardeners for Grass Ltd, a
landscape gardening company owned by Deborah, their aunt. They are to
work on a contract to landscape the grounds of High Hall, a large stately
home and have agreed to finish the work by 20th September 2008. The
work on the project was delayed due to weather conditions and problems
with acquiring certain plants and seeds.

On the evening of 18th September 2008, Deborah met Louise and Jasmin
in the local coffee bar after work and told them that the work at High Hall
was so far behind schedule that she feared missing the deadline and losing

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future contracts with the Hall. Deborah offered Jasmin and Louise an extra
£2,500 each if they completed the work by the contract date.

Louise and Jasmin managed to get the work done on time but, when they
approached Deborah to collect their £2,500 each, Deborah refused to pay.

Further Reading:
Treitel 12th ed: pp111-130 & 135-146.

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 Tutorial 5

MISTAKE AND MISREPRESENTATION

Reading:
McKendrick Cases and Materials: Chapters 16 & 17.

Important Cases:
Bell v Lever Bros [1932] AC 161
Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd
( The Great Peace) [2003] QB 679
Shogun Finance Ltd v Hudson [2003] UKHL 62
Hedley Byrne v Heller [1964] AC 465
Dimmock v Hallett (1866) 2 Ch App 21
Bissett v Wilkinson [1927] AC 177
Edgington v Fitzmaurice (1885) 29 ChD 459
Derry v Peek (1889) 14 App Cas 337
Howard Marine & Dredging v Ogden [1978] QB 574
Royscott v Rogerson [1991] 2 QB 297
Smith New Court Securities v Citibank(on appeal from Smith New Court
Securities v Scrimgeour Vickers (Asset Management) [1997] AC 254
HIH Casualty & General Insurance v Chase Manhattan Bank [2003] 2
Lloyds Rep 61

Part I:

1. What is a misrepresentation? Given the existence of liability for

misrepresentation as well as breach of contract, just how important is the
doctrine of common mistake?

2. "Wings" is a business specialising in the charter hire of aircraft. Bernard

telephones "Wings" and makes enquiries about hiring an aircraft for use in
his engineering export business. Bernard has 500 boat engines which he
needs to export to Canada by 30 June as part of a lucrative contract with a
Canadian pleasure boat company, "Ripple."

Bernard speaks to Andrew, the managing director of "Wings", who tells

Bernard that based on the weight of each boat engine his aircraft can
"comfortably carry 50 engines on each flight." Based partly on this
information and partly on an assurance that Andrew gave Bernard as to the
reliability of his aircraft, Bernard enters into a contract with "Wings" for the
hire of one DC12 aircraft between 18 - 28 June for a hire of £5,000.
Bernard takes delivery of the DC12 aircraft on 18 June and loads it with 50
boat engines. The DC12 is unable to lift off and the pilot informs Bernard
that the engines are too heavy.

Bernard telephones "Wings" who maintain that the DC12 is perfectly

capable of carrying 50 boat engines of the weight described. Andrew's
knowledge of the carrying capacity for the DC12 is based upon the figure
given for the aircraft in the "Biggle's Register", a register of all aircraft,
which is regarded as highly accurate and authoritative in flying circles. If
Andrew had consulted the DC12's ownership documents (which are written
in French) he would have discovered that the DC12 was not in fact capable
of carrying a load of 50 boat engines of that weight. Fearful of being unable
to deliver the boat engines to "Ripple" on time, Bernard returns the DC12 to
"Wings" and hires a replacement aircraft, which can carry 50 boat engines,

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from "Bluebirds" at a cost of £7,000 . Bernard delivers all the boat engines
to "Ripple" on time.

"Wings" are now demanding that Bernard pay the £5,000 hire charges for
the DC12. Bernard refuses to pay and also claims compensation for the
£7,000 hire charges he had to pay to "Bluebirds."

Advise Bernard.

Would it make any difference to your answer if Bernard were an aircraft

enthusiast with an expert knowledge of DC12 aircraft?

Part II

Since this tutorial is already somewhat ambitious in its scope it is unlikely

that there will be time to cover the following questions. Please use them
instead for self-study and for revision purposes. Students should be
warned that exclusion from the main tutorial matter is in no way
indicative of exclusion of the topic from the exam.

1. Is it helpful to make a conceptual distinction between mistakes that

negative consent and mistake that nullify consent?

2. How likely is a court to rule that a contract is vitiated at common law by

a shared mistake? Is it simply a question of assessing the economic
importance of the mistake?

3. Can a plausible distinction be drawn between a mistake as to the

identity of the other contracting party and a mistake as to his/her
attributes?

4. Having consulted a national directory of second-hand book sellers,

Wallis, a collector, decides to visit a Manchester shop (“Massimo’s”),
which is owned and run by Massimo Bonnello, a celebrated expert in
19th century Italian literature. Wallis has started to collect the works of
Federico Frangipane, a 19th century political exile and essayist. On
entering Massimo’s, he conducts a lively conversation with a man
whom he assumes to be Massimo Bonnello. This man advises him to
purchase a particular book by Frangipane which contains the initials of
a previous owner, SR. Wallis believes that these initials stand for Silvio
Ruffino, a hero of the Italian unification movement. He is excited by this
but keeps his discovery to himself. A price of £100 is agreed and paid
for the book.

Several months later, Wallis discovers that the book was never owned
by Silvio Ruffino. It is in fact worth only £25. He also discovers that
Massimo’s had been sold a week before he visited it. The new owner,
Paolo, continued to trade under the name Massimo’s as he was
entitled to do under the terms of the sale of the business. It was Paolo
himself who sold Wallis the book.

Advise Wallis.

Further Reading:
Treitel 12th ed: Chs 8 & 9

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Dr Fiona Smith
September 2009

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