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ILAC
Issue: Breach of Terms in Contract Law
Law: According to the law, a term can either be a condition, a warranty or an innominate term
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The breach of which results in repudiation of the contract or a lawsuit
for damages
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Price, delivery date
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An innominate term is neither a condition nor a warranty, the
consequences of the breach will depend on the seriousness of the breach
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Per
this case, the plaintiffs hired out a ship to Kawasaki
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A term
in the contract required the vessel to be “in every way fitted for ordinary cargo service” However, the
crew were insufficient in number and incompetent to maintain the ship
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On arrival to its
destination, a further 15 weeks repairs were required, during this time market freight rates fell and
Kawasaki rescinded the contract
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The ratio was, the ship was seaworthy but the crew failed the exercise due diligence to maintain the
vessel
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The term was found to be
innominate
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The plaintiff must suffer a loss, 2
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The loss must not be too remote from the breach, 4
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For the breach of a warranty, damages are the only remedy
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As per
Doran v Delaney “…if a party to a contract breaks that contract, the other party is entitled to be
compensated on the basis of what he has lost by the reason of the contract not being performed” The
compensation principal states that the basic reason the plaintiff will be awarded damages is to
compensate them for their loss
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(ii) The loss must me such that it might reasonably be in the minds of the parties at the
time the contract was formed as a probable result of a breach
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The old broken shaft had to be sent to Baxendale as a
model for creating the new shaft
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Hadley
sued Baxendale for their loss of profit
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The opposing view can be found in Heron II where carriers were required
to deliver sugar with “all convenient speed”
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The ship was a week late and the price of sugar had collapsed
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It was a reasonably foreseeably
loss thus damages were awarded
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It is discretionary and rarely
applied re commercial transactions however, more common re land transactions
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An agreement is a reasonably definite understanding between parties or “consensus ad idem”
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There must also exist a “mirror image principal” – the acceptance
must match the terms of the offer
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Intention to create legal relation is assumed re business arrangements
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As per Thomas v Thomas and the
Irish case, O’Keefe v Ryanair, consideration must move from the promise
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In the case O’Keefe v Ryanair, MS O’Keefe was promised
free flights for life for being Ryanair’s one millionth passenger
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Ryanair tried the limit the amount she could fly, but the courts found that the publicity
she gave was sufficient consideration
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Consideration must also be sufficient
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As per Roscarla v
Thomas, past consideration is not sufficient
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The plaintiffs has underestimated the cost of
the work and were unable to complete it without further funds
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The job was finished however Roffey Brothers refused to pay extra
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However, the courts found that the fresh
consideration was the guarantee that the work would be completed
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However, It was held that A’s performance of an existing duty was sufficient consideration
where B derived a partial benefit from the performance
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The Doctrine of Waiver outlined that even when a promise is not supported by consideration, the
promisee may still bind the promisor under the doctrine of waiver
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If one party promises that he will not insist on his strict contractual rights (doctrine of waiver), he will not
be allowed to retract that promise if the promise has been acted upon by the other party
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This is known as the doctrine of promissory estoppel
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The court will
give the interpretation that favours the innocent party
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Contracts may be discharged by 1
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A mutual agreement for the parties to terminate the
contract
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The Doctrine of Exact Performance
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As per Re: Moore v Landauer, the plaintiff ordered tins of fruit from the defendant
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The performance was not exact and therefore
the contract was terminated
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This was outlined in Wilkenso V Fenwick which involved a contract for timber, Under 1%
failed to meet the exact requirements
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As per Shipton v Anderson which involved an excess supply of 0
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The issue of exact performance may be avoided with a variation clause
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The contract may be terminated under the doctrine of frustration
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Subject matter destroyed
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(c) the performance becomes illegal
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A contract may be terminated following a breach
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(a) A fundamental breach cannot be excused with an exclusion clause, as per
Clayton Love v B&I Transport
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In this case the plaintiffs hired Securicor to guard their premises
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However, the plaintiff had an
exclusion clause to exclude all liability to unforeseeable losses
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The Sales of Goods and Supply of Services Act 1980 outlines that goods must be of merchantable quality
and where the buyer is a consumer the exclusion of liability is void
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Repudiate the contract, or 2
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A contract may
only be repudiated if the term is a condition
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Repudiation is most important mid contract
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The defendants were careless and water began to seep through the
roof
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The remedy was to terminate the contract and
sue for damages
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Issue: Contractual Formation
Offers, Invitation to Treat, Counter Offers
Law: A contract is a legally enforceable agreement between parties
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1
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An agreement is a reasonably definite understanding between parties
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An offer is a statement of conduct that indicates a clear
intention to contract on terms that are reasonably definite
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The terms of the offer must
match the terms of the agreement
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An invitation to treat
does not constitute an offer as outlined in Minister for Industry and Commerce v PIM
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The cash price was stated but the credit price
was unclear
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PIM argued that the coat was an invitation to treat and the statute only
applied to offers
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The law regarding ads in newspapers has been outlined in
Carlill v Carbolic Smoke Ball Co
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The ad stated that if you used the product in a certain fashion you were
guaranteed to be protected from influenza, the ad was highly detailed and contained testimonials from
famous people and also stated that an £100 would be awarded to anyone who used the smokeball and
became ill
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The plaintiff
contracted influenza and claimed the award, however CSB claimed that the ad was an invitation to treat
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There exists several rules regarding acceptance, Entores v Miles held that oral acceptance must be heard
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Kelly v Cruise Catering Ltd established the postal rule which claims that
acceptance becomes legally binding at the time of the posting and not when received
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2
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Consideration is what’s given in return for an
agreement
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There must be an intention to create legal relation
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Terms of a Contract
Terms and exclusion clauses
Law: A condition is a key, important term of a contract
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eg
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A warranty is a less important term, the breach of which only
allows the innocent party to sue for damages
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Terms must be
incorporates 1
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”
2
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Parker v South Eastern Railings concerned a plaintiff who checked his bag into a cloakroom,
he was handed a ticket in exchange which contained a clause limiting liability for any losses
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This case held that there would be reasonable notice if (a) the plaintiff
knew there was printing on the ticket, (b) the defendant had done enough to draw the plaintiffs’
attention to the conditions
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Thornton v
Shoe Lane Parking involved a plaintiff who received a ticket at the entrance of a car park
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There was also a more detailed display of
exclusion clauses displayed inside the premises claiming that Shoe Lane would not be liable for any
injuries or losses
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This concept has also been outlined in an Irish case, Carroll v An Post National Lottery
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Carroll’s numbers were
drawn on the lottery, however he suffered a loss due to the negligence of the sales assistant
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However, there was an exclusion clause on the back of the payslip and the
there was a copy of the rules which included the exclusion clause clearly available at the agent
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” The ratio in Thornton was applied and Carroll lost his case
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For example, using bigger and bold font
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Terms must be incorporated by course of dealings
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CASE NOTES & SUMMARIES
Neville Sons v Guardian Builders Ltd
This was a contract law case, it outlines discharge under the doctrine of frustration
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By consent of the parties, 2
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Under the
Doctrine of Frustration and 4
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Frustration is a defence used in contract law when the existence of a certain state of affairs, that the
parties have based their agreement on, has disappeared so the contract has no application
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In this case, the defendant contracted with the plaintiff to construct a housing estate on his property
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The road
could also serve lands the rear of a hotel owned by the defendants
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The defendant agreed to construct all access roads and all the roads throughout
the proposed housing estate
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However, a problem arose and the defendants wanted the change the
position of the road
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The council agreed to sell their strip of land provided the
defendants did not move the road
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The plaintiff
sought specific performance and damages for fraudulent misrepresentation
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This case was taken to the high court, where the court found that it was impossible to perform
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The Supreme Court adopted a decision from an English case, National Carriers v Pina
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It must also be unforeseeable, and be unjust to hold the parties to the
contract
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The Supreme Court found that the
action of purchasing a plot of land to construct a road was impractical, onerous and difficult but not
impossible
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Connolly v South of Ireland Asphalt
This was a case in Tort Law, it outlines the Doctrine of Causation in tort law
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The defendant was a quarrying company
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The weather conditions caused these potholes to fill with water, usual traffic
splashed the water onto the road
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Mr Wade was driving a motorcycle along the road and fell off due to the conditions
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Mr Wades wife sued Mr Connolly for her losses, Connolly then sued
South of Ireland Asphalt claiming that he wasn’t the main cause of the loss
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His negligence did not constitute
a Novus Actus interveniens
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There must be a causal link between the plaintiff’s loss and the defendants conduct
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“But For” test, an act is the cause of a loss if the loss would
have happened “but for” the act in question
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The material element test
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3
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This test applies where there is a number of causes to
a loss
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There
may be an unbroken causal link connecting the plaintiffs lost to the defendant’s action
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Innominate Terms
According to the law, a term can either be a condition, a warranty or an innominate term
...
The breach of which results in repudiation of the contract or a lawsuit for
damages
...
Price, delivery date
...
An innominate term is neither a condition nor a warranty, the
consequences of the breach will depend on the seriousness of the breach
...
Per
this case, the plaintiffs hired out a ship to Kawasaki
...
A term
in the contract required the vessel to be “in every way fitted for ordinary cargo service” However, the
crew were insufficient in number and incompetent to maintain the ship
...
On arrival to its
destination, a further 15 weeks repairs were required, during this time market freight rates fell and
Kawasaki rescinded the contract
...

The ratio was, the ship was seaworthy but the crew failed the exercise due diligence to maintain the
vessel
...
The term was found to be
innominate
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However, Cehave
got a third party to purchase the goods on their behalf for a third of the price
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There must be a causal link between the plaintiff’s loss and the defendants conduct
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“But For” test, an act is the cause of a loss if the loss would
have happened “but for” the act in question
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In this case the plaintiff was a widow who sued the Hospital where her husband went seeking
medical treatment
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Barnett lost her case as her husband would’ve died despite the negligence of the hospital
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The material element test
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3
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This test applies where there is a number of causes
to a loss
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He decided to go down a set of stairs unaided with no
handrail, his leg gave way and he suffered further injuries
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Another example of NAI is Connolly v South of Ireland
Asphalt where the defendant was a quarrying company
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The weather conditions caused these potholes to fill with water,
usual traffic splashed the water onto the road
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Mr Wade was driving a motorcycle along the road and fell off due to the
conditions
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The Supreme Court found that his conduct did
not constitute a Novus Actus Interveniens as he was driving negligently
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There may be
an unbroken causal link connecting the plaintiffs lost to the defendant’s action
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The aim of the Doctrine of Causation is to achieve fairness in fact and in law

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