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Alan is a qualified accountant. Last year his father, Ben, who owns a small manufacturing business, asked him if he would prepare his tax return for him for a fee of £500. Having said he would, Alan did the accountancy work and Ben submitted the accounts to the tax authorities. Ben now refuses to pay Alan, saying that it is not right for a son to charge his father for doing him a favour.
Alan, in an attempt to encourage his daughter, Dawn, in her studies, promised that he would buy her a new car if she passed her final examinations. Although Dawn has now passed her exams, Alan is refusing to buy her the promised car.
Question
Task 1Identify which of the following categories of dealings applies.
Social or domestic / Commercial – Preparation of tax return for Ben
Social or domestic / Commercial – Promise of a new car to DawnHi Mike
For this question I just wanted to ask why Preparation of tax return for Ben is not under social and domestic because that’s what I answered and I got it wrong.
In January, Ami took over an old warehouse with the intention of opening an art gallery. As the warehouse had to be converted, Ami entered into a contract with Cis to do all the necessary painting. Cis was to be paid £5,000. Cis received an initial payment of £1,000 and agreed to have the work completed by 31 March.
At the end of February, Cis told Ami that she would not complete the work in time unless Ami agreed to increase her payment by a further £1,000. Ami agreed to ensure that the job was done on time.
On completion of the work on time, Ami refused to make the additional payment to Cis, beyond the original contractual price.
Question
Task 2Indicate which, of the following are past consideration and which are not.
Past consideration / Not past consideration – Ami’s initial payment of £1,000
Past consideration / Not past consideration – Cis’s initial agreement to complete the work by 31 March
Past consideration / Not past consideration – The work that had been done by Cis at the end of February
Past consideration / Not past consideration – Ami’s agreement to pay the further £1,000Hi Mike
I need some help understanding the meaning of past consideration.
Could you please explain to me which of these are past consideration and which of these are not. Thanks.
Hi Harjot
The key element in this question is the £500 offered by Ben. Other than that £500, there is no consideration mentioned in the question moving from Ben. OK, domestic contracts are often seen to be unenforceable. But in the Ben / Alan situation, there is clear intention by Ben to pay Alan for Alan’s professional services.
So, it’s a commercial agreement.
If the question was that Ben had asked Alan to prepare the tax return, and there had been no mention of money until the work had been completed by Alan (who then said ‘There you go Ben. Now give me £500), then it’s likely the Courts (if it had gone to Court!) would have said that the filling of the tax return was past consideration and that the £500 was unsupported by any further consideration
OK?
Hi again, Harjik
The Ami / Cis case is similar to the case Williams v Roffey. Put that in your search bar and read the detail (it’s not long!) For Williams, read Cis and for Roffey read Ami.
Now, the question!
Past consideration / Not past consideration – Ami’s initial payment of £1,000 – past consideration. The initial payment is made before any work has been started
Past consideration / Not past consideration – Cis’s initial agreement to complete the work by 31 March – we’re looking at this from the end of the contract. This is part of the initial agreement so not past consideration
Past consideration / Not past consideration – The work that had been done by Cis at the end of February – by the time of the revision at the end of February, the work already performed by Cis is past and insufficient to support the revision that we are now facing
Past consideration / Not past consideration – Ami’s agreement to pay the further £1,000 – is the promise of a further £1,000 supported by consideration moving from Cis? That’s the big issue. According to the decision in Williams v Roffey, yes. The extra effort that Cis presumably has to put in to finish the contract on time according to the original contract was deemed by the Court in W v R to be sufficient to support the promise of the additional payment promised by Ami
The work already done by Cis as at the end of February is, without doubt, past consideration. But the extra effort required from Cis to support the promise of additional payment IS sufficient.
Is that any better for you?
Which of the following contracts could be enforced by an order of specific performance?
A. A contract with a minor
B. A contract of employment
C. A contract for the loan of money
D. A contract for the purchase of landHi Mike
For this question the answer is D, and the mark scheme says that A , B and C would be inequitable and/or unsupervisable.
Could you please explain what is meant by this and why D is the answer?
Q1 Following a written private order for 50 cases of brown ale, with 12 one pint bottles per case, Mr Ramsbottom finds that he has been sent the equivalent order in larger one litre bottles. His rejection of the entire consignment incurs additional cost to the supplier who commences legal action for breach of contract.
What is Mr Ramsbottom’s liability in contract law?
A. He is liable for breach of contract as repudiation is not possible the supplier’s breach of warranty
B. He is not liable as he was entitled to repudiate the contract for the breach of the condition that the goods must match the description
C. He is not liable as his purchase was not a consumer sale
D. He is liable for breach of contract as any packaging of goods is only a warranty and he did not have the right to repudiate itAnswer is B and mark scheme says – Failure to comply with conditions (one pint bottles) entitled Mr Ramsbottom to rescission and damages. Thus the supplier has no grounds for a claim against him.
Q2 Den, a shop owner, orders 144 half litre bottles of soft drink with 12 crates of 12 half litre bottles per crate. 144 half litre bottles are delivered but in six crates of 24 bottles per crate. Den rejects the whole consignment.
What is Den’s liability in contract law?
A. As this is not a consumer sale Den would not be protected by contract law
B. There has only been a breach of warranty. Den must pay for the goods and claim damages
C. Den is in breach of contract by rejecting the goods and is liable to pay damages
D. The goods delivered do not match the description. The supplier has breached a condition and Den is entitled to treat the contract as dischargedAnswer is C and mark scheme says – A contract can be rescinded for breach of condition but not warranty. Den should not have rejected the goods and is therefore liable to pay the supplier for any damages suffered for having done so.
Hi Mike
Is goods matching their description a warranty or condition?
Secondly, I’m a little confused with why the outcome in these two questions are different? Could you please explain how you would go about analyzing these two questions as well?
“Which of the following contracts could be enforced by an order of specific performance?
A. A contract with a minor
B. A contract of employment
C. A contract for the loan of money
D. A contract for the purchase of landHi Mike
For this question the answer is D, and the mark scheme says that A , B and C would be inequitable and/or unsupervisable.
Could you please explain what is meant by this and why D is the answer?”
Hi again Harjiik
Looking at each one separately:
It would be inequitable to enforce a contract with a minor – a basic premise is that minors don’t properly understand what obligations and liabilities will potentially result from their under-age actions. So where a minor does enter into a contract, this tends to be voidable at the minor’s discretion. Possible exceptions lie in the areas of ‘contracts for necessaries’ and ‘contracts for the minor’s education or benefit’
A contract of employment would not be capable of supervision by the Courts. From either perspective! Neither the employer nor the employee would likely succeed in looking to the Court for an order of specific performance. Imagine if such an order were granted. Imagine if David Beckham had been ordered to continue playing for Manchester United. What would stop him from simply turning up on a Saturday and standing alone in the centre of the pitch for 90 minutes without making any effort to utilise his (questionable) footballing skills. How could a Court supervise Beckham’s actions if he were not to play to the best of his abilities?
A loan contract – remember that an order for specific performance is an equitable remedy and will only be granted where the common law remedy of damages would not be a sufficient remedy. Even in a worst case scenario where a potential lender has told the potential borrower that the lender is not going to go ahead and lend $5,000 at a great interest rate of 0.05%. So the borrower can look elsewhere and borrow $5,000 at 3% from a different lender and sue the original potential lender for the extra 2.5% by way of a claim for damages.
Specific performance will typically be awarded in a situation where the subject matter is unique. A contract for the purchase of land would fit that requirement. A piece of land is a definitive subject – it’s THAT piece of land. So an award of damages would not be a sufficient remedy and thus option D has to be the chosen one.
OK?
Your next question :
“Is goods matching their description a warranty or condition?
Secondly, I’m a little confused with why the outcome in these two questions are different? Could you please explain how you would go about analyzing these two questions as well?”
Whether a term in a contract is potentially either a warranty or a condition, it would be classed as an innominate term. Only when that term is breached may the Courts determine the relative importance of the term that is breached.
Comparing the Ramsbottom case with Den’s case we can see (hopefully!) that drink containers of the wrong size could give rise to all manner of awkwardness requiring Mr Ramsbottom to decant the litre bottles into pint bottles in order to finish up with his specified instructions. Had he simply ordered 600 pints of Brown Ale and the correct quantity was delivered in litre bottles, Mr Ramsbottom would have had no claim and no right to reject. But he didn’t! He specified pint bottles so presumably the bottle volume was an important element of his order.
In Den’s case, the liquid has arrived in the correct sized bottles even though the crate size is incorrect. It would be a stretch of the imagination to consider crate size to be critical so it seems that the supplier has breached a ‘less-than-important’ term and thus it is a breach of warranty. And, as you no doubt remember, a breach of warranty is not SO important as to enable rejection / repudiation of the contract. It would give rise only to a claim for the damages suffered as a result of delivery in the wrong sized crates.
Certainly Den should not have rejected the goods and is therefore liable to compensate the supplier for any damages suffered as a result of Den’s rejection.
In this question, Den SHOULD have accepted the goods and claimed damages. What he DID do was reject the goods, and that was a course of action that he should not have taken thus enabling the supplier to claim damages.
You ask how I would go about analysing the questions – I believe that I have done that in my answers. If you need more, post again,
OK?
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