Law of Contract
PART A
The question in this section is a compulsory question which you must answer.
Question 1
Andrew was a registered cat breeder who bred various types of cats for sale. He saw an advertisement for wet cat food on the website of Safefood Ltd. The advertisement said that the wet food made by Safefood Ltd was suitable for all breeds of cats and each pouch contained 80g of meat.
What attracted Andrew the most was the promise to provide a free gift, a large cat tree, if one purchased 1000 or more pouches of wet food from Safefood Ltd.. Therefore, Andrew purchased 1000 pouches of the wet food at a price of 1000 pounds in total and collected the tree happily.
Among all cats Andrew bred, there were three Kurilian Bobtail cats which were very rare. They were allergic to the wet food sold by Safefood Ltd., as the food contained corn products which caused those three cats to lose hair. However, cats of other breeds were not affected by the products. Also, Andrew found out that the weight of each pouch was only 79g instead of 80g. Moreover, what made him a bit annoyed was that the cat tree was not stable when cats climbed it; it fell down a few times in a day.
Andrew reported these issues to Safefood Ltd. and hoped the company could find solutions to the issues. However, the company defended that it was not responsible for the hair loss as Andrew did not inform the company of the rarity of the cat. Also, the differences of the weight of the pouches are negligible, so it should not be a problem. With regard to the cat tree, since it was free, so the company had no responsibility for the quality of it.
Andrew’s three Kurilian Bobtail cats were very popular and he had received orders from three buyers. Though the market price of each Kurilian Bobtail cat was around 1200 pounds, the buyers were all happy to pay 2000 pounds to buy one. It is clear that Andrew could not sell them without a treatment for the cats, which might cost around 300 pounds. Also, Andrew worried that the buyers would cancel the offers.
Please advise Andrew as to whether Safefood Ltd is liable to his loss and which part of the loss he could recover. 40 marks
PART B
You must answer TWO questions from this section. There are five questions in this section from which to choose.
Question 2
Zelda was the director of a company named Warmth Ltd. The main business of the company was to sell and install underground heating systems. Zelda approached a customer, Link, at his home and persuaded him to enter into a credit sale agreement to replace the old heating system in Link’s house. Warmth Ltd would install a new one for him. Link agreed to pay a total amount of 8000 pounds and he could pay the bill in 36 instalments under the credit sale agreement.
Both signed the agreement and Link was informed of his cancellation rights. However, a week later, Link found a mistake in the agreement, as Zelda wrote a wrong figure for the cost of credit. Link decided to cancel the contract and he phoned Zelda to report the issue. Zelda agreed to rectify the mistake, but she believed that Link was bound by the contract. 30 marks
Question 3
Johnson was a successful businessman who owned a mansion in London. He contracted with a builder, Tom, to build a mini-golf course next to a beautiful private garden in the grounds of his mansion so that Johnson could show off his success to his friends while playing golf with them.
Tom built the mini-golf course in a slightly different location, which was 10 meters to the left of the agreed place. However, the quality of the work was satisfactory. The contract between them provided that Johnson should pay 30% of the construction costs in advance of the start of the building work, but Johnson did not pay anything prior to the completion of the golf course. After three months, the work was completed. When Tom tendered the final invoice to Johnson for payment, Johnson asked Tom to remove the complete golf course and to rebuild a new one in the right location. Tom told Johnson that it would be very costly to do that and he might have to close his business as a result of the cost of the extra work. Johnson insisted on his decision. Advise Tom as to whether he can defend Johnson’s specific performance claim successfully. 30 marks
Question 4
Critically discuss the rules on passing of property in specific or ascertained goods and unascertained goods. 30 marks
Question 5
The law of agency allows undisclosed principals to intervene contracts signed by their agents and the third parties. Discuss the justification of such intervention and examine the circumstances where intervention by undisclosed principals may not be available. 30 marks
Question 6
‘The Contracts (Rights of Third Parties) Act 1999 satisfactorily solves the issues arising from the strict operation of the privity of contract doctrine.’ Critically discuss this argument alongside the common law solutions to the privity of contract doctrine. 30 marks