Pdc 3 Chap 10 Test Creation Set

Front 1

Analyse the basic elements of a legally binding contract.

Back 1

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Front 2

Evaluate when a party may sue to enforce a contract and when it may not do so.

Back 2

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Front 3

Explain the difference between an "express" and an "implied" term in a contract.

Back 3

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Front 4

Assess the circumstances in which a contract can be discharged.

Back 4

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Front 5

Outline the remedies for breach of a contract.

Back 5

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Front 6

Evaluate the significance of the Sale of Goods and Supply of Services Act 1980, the European Communities (Unfair Terms in Consumer Contracts) regulations 1995 and the European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004

Back 6

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Front 7

What Is A Contract?

Back 7

A contract is an agreement which is enforceable at law. Not all agreements are contracts.

Front 8

In deciding when an agreement is legally enforceable as a contract, certain components must be present - what are they?

Back 8

In deciding when an agreement is legally enforceable as a contract, certain components must be present. There must be a valid offer and acceptance to create the contract, rules in relation to consideration must be abided by, and there must be an intention to create legal relations.

Front 9

Are contracts always written?

Back 9

Contracts may validly exist in different forms and may be: oral, written, or Partially written and partially oral

Front 10

Describe an oral contract. What is the significance of Pernod Ricard & Comrie plc v FII (Fyffes) plc? What is the judges' name and what did he say?

Back 10

A contract may be enforceable where it is purely verbal. In the case of Pernod Ricard & Comrie plc v FII (Fyffes) plc [Unreported, High Court 21 October 1988, per Costello J], Mr Justice Costello stated "the execution of a written document was not made a condition precedent to the defendant's liability under the agreement; it was merely a means of implementing a concluded bargain." It may of course be noted that it is difficult to prove that an oral contract was created.

Front 11

Describe a written contract. What section of what legislation requires what types of contracts to be evidenced in writing?

Back 11

Written - Certain contracts are required to be in writing or to be evidenced in writing. Section 2 of the Statute of Frauds 1695 requires the following contracts to be evidenced in writing: • Contracts of guarantee or surety; • Contracts made upon consideration of marriage; • Contracts relating to the sale of lands; • Contracts not to be performed within one year.

Front 12

Describe contracts that are Partially written and partially oral. What is parol evidence?

Back 12

Partially written and partially oral - In certain circumstances, a contract may be partially written and partially oral. If a situation arises where there is confusion between written and oral express terms in a contract, then parol (oral) evidence may be introduced to help clarify the situation. However, parol evidence will not be permitted where it would add to, vary or contradict the agreement in question.

Front 13

In general, if there is conflict between an oral and a later written contract, which takes precedence under what conditions?

Back 13

In general, where there is conflict between an oral and a later written contract, the written form will take precedence if it is expressly drafted and agreed by the parties.

Front 14

What is an Offer?

Back 14

An offer can be defined as an express or implied statement of terms on which the offeror is prepared to be contractually bound in the event that an acceptance is made on the part of the offeree

Front 15

What are the conditions for an offer to be an offer?

Back 15

The offer must be certain and unambiguous. In order to qualify as an offer, there must be communication between the parties involved. Silence cannot amount to an acceptance where the offer was not communicated. Not every statement made amounts to an offer

Front 16

What is an Invitation to Treat?

Back 16

An invitation to treat comes into being where for example a retailer invites offers from the public while retaining control over the quantity of acceptances or rejections of offers based on the amount of available stock.

Front 17

Is a display of goods on a shop window an offer? Why?

Back 17

For example, a display of goods on a shop window is not an offer to enter into a contract but an invitation to treat. The reason why a display of goods for example is regarded as an invitation to treat rather than a formal contract is that the retailer would be liable to be sued for a failure to fulfil contracts where the number of acceptances exceed the number of offers. There would also be implications for customers, who could be liable to be treated as accepting an item simply by placing it in their shopping basket.

Front 18

Is an advertisement an offer? Why?

Back 18

Is an auction an offer? Why? An advertisement of goods available for purchase is another example of an invitation to treat. An advertisement would generally be too uncertain and lacking in detailed information to constitute an offer. An advertisement of a unilateral contract may qualify as an offer if a court forms the view that it was intended to be acted on. An auction will also amount to an invitation to treat. Auction bids are regarded as offers and the acceptance of an offer occurs on the fall of the auctioneer's hammer.

Front 19

What is a unilateral contract versus a bilateral contract?

Back 19

A unilateral contract is one where one party performs and makes obligatory the promise of the other. A bilateral contract imposes obligations on both parties

Front 20

What is a Statement of Intention/Opinion

Back 20

A statement of intention or opinion given in reply to a question will not be considered as giving rise to a contract.

Front 21

What is a Statement of Fact

Back 21

A statement of fact will not be considered an offer.

Front 22

When may an offer be terminated?

Back 22

An offer made may be terminated for a number of reasons: lapse of time, revocation, rejecting the offer, death

Front 23

In the context of termination of offer, describe lapse of time. What constitutes reasonable time?

Back 23

Lapse of time An offer may remain in existence for a specific time period. If the offer is not accepted within the specified time limit then it will lapse. In certain cases an offer will not be subject to a time limit. In such circumstances the offer may remain in existence for a reasonable period of time. What constitutes a reasonable period of time will depend on the facts and circumstances surrounding the offer.

Front 24

In the context of termination of offer, describe revocation

Back 24

Revocation - An offer may be withdrawn at any time before acceptance occurs. This is the case even where the offer says that it will remain open for a specific time frame. There must be communication of the revocation to the offeree before the offer can be considered to be withdrawn. The postal rule does not apply to revocation therefore a letter communication of an offer only becomes operative when it is actually received by the offeree.

Front 25

What is the postal rule?

Back 25

The postal rule provides that an acceptance is effective when it is placed in the post

Front 26

In the context of termination of offer, describe rejection of the offer

Back 26

Rejection of the offer - Where the offeree rejects the offer, then in general, the offer in the form in which it was first offered will die. A counter offer may amount to a rejection of the offer in its original form, unless the counter offer can be categorised as an enquiry.

Front 27

In the context of termination of offer, describe death

Back 27

Death It is unclear whether death before acceptance takes place results in a situation where it is impossible to accept the offer and hold the estate of the deceased liable for the resulting obligations.

Front 28

What is 'acceptance'?

Back 28

Acceptance is a final expression of agreement to the terms of an offer. If acceptance has the effect of varying the terms of the offer, or seeks to include new terms then it is a counter offer and not an acceptance. The parties must agree to the same terms. Acceptance can occur through the performance of a certain action, in such a case the court can infer acceptance through conduct. Acceptance must be communicated, unless this requirement is waived. A contract only comes into existence when the offeror becomes aware that the offer has been accepted by the offeree.

Front 29

What is the exception to the acceptance rule?

Back 29

There is an exception to this rule where the parties communicate by post. In this case, the contract is considered to come into being when the document of acceptance is placed in the post. This is known as the "postal rule".

Front 30

In terms of contract acceptance, what is the rule for instantaneous methods of communication? Is there anything to note with this approach?

Back 30

In relation to instantaneous methods of communication, the general rule applies i.e. that acceptance becomes effective only when received by the offeror. However, it has been noted that this rule may need to be varied for different methods of communication such as fax or e-mail.

Front 31

If the offeror requires acceptance to be made in a particular manner, and another method is used, does this cause any problems? Quote two cases to support the answer

Back 31

If the offeror requires acceptance to be made in a particular manner, and another method is used, issues may arise in relation to the effect of using another means of communication. Cases which have considered this point (Tinn v Hoffmann Co (1873) 210 LT 271 and Staunton v Minister for Health (unreported, High Court, 21 February 1986)) take the position that another method of acceptance may be used as long as this does not adversely affect the offeror.

Front 32

For a contract to come into existence, the parties must intend what? The arrangement, if in question, will be examined how?

Back 32

For a contract to come into existence, the parties must intend to be legally bound by the agreement - an intention must be present. In general, the arrangement will be examined from the standpoint of what a reasonable person would think the parties intended, based on the facts and given circumstances.

Front 33

Are all agreements legally enforceable?

Back 33

Certain agreements will be presumed not to be intended to be legally enforceable. Agreements between families and family members are presumed not to give rise to enforceable arrangements. However, as this is a presumption only, decisions as to enforceability are made on a case by case basis.

Front 34

In general, in order for a promise to be enforceable as a contract, what must occur?

Back 34

In general, in order for a promise to be enforceable as a contract, there must be some type of consideration provided in return for the promise/offer made by the offeror. A promise must be made in return for another.

Front 35

In contract law, what is the definition of consideration? Quote cases to support answer

Back 35

Agreement has not been reached as to a correct definition of what consideration is. One suggestion as to what consideration is dates from the case of Thomas v Thomas has a definition that requires that one party has conferred a benefit on the other party in return for the other party's promise or that one party has suffered a detriment and the promise of the other party is intended to compensate it. Dunlop v Selfridge defines consideration as being an act or forbearance or promise of one party which is bought either by giving a promise or doing an act in return.

Front 36

What is the significance of Thomas v Thomas (1842)?

Back 36

One suggestion, as to what consideration is, dates from the case of Thomas v Thomas (1842) 2 QB 851: "Consideration means something which is of value in the eyes of the law, moving from the plaintiff: it may be some detriment to the plaintiff or some benefit to the defendant". This definition requires that one party has conferred a benefit on the other party in return for the other party's promise or that one party has suffered a detriment and the promise of the other party is intended to compensate it.

Front 37

What is the significance of Dunlop v Selfridge [1915]

Back 37

An alternate definition as to the meaning of the term consideration can be found in the case of Dunlop v Selfridge [1915] AC 847 which defines consideration as being an act or forbearance or promise of one party which is bought either by giving a promise or doing an act in return.

Front 38

Consideration must be ... what and what does this mean?

Back 38

Consideration must be sufficient; this means that it must be in a form that is recognised by the law as making a promise which is given in return and enforceable.

Front 39

Does agreement to carry out a public duty amount to consideration?

Back 39

An agreement to carry out a public duty cannot amount to consideration, although there is case law to support the point that doing something over and above what is required by the public duty may amount to sufficient consideration.

Front 40

Does completion of existing contractual duty owed to a party amount to consideration?

Back 40

Completion of an existing contractual duty owed to a party does not, except in certain circumstance, amount to sufficient consideration.

Front 41

Can consideration be provided at different times?

Back 41

Consideration can be provided at different times and still be considered sufficient.

Front 42

What are the three types of consideration?

Back 42

Past, executors, and executed

Front 43

What is executory consideration?

Back 43

Executory consideration involves a promise to do something or to refrain from doing something in the future. In that case, the contract comes into being prior to its performance. Future consideration. When the consideration on both sides is to move at a future date, it is called 'future consideration' or 'executory consideration'. It consists of an exchange of promises and each promise is a consideration for the" other. For example, X promises to sell and deliver 10 bags of wheat to Y for Rs 6,500 after a week, upon Y's promise to pay the agreed price at the time of delivery. The promise of X is supported by promise of Y and the consideration is executory on both sides. It is to be observed that in an 'executed consideration', the liability 'is outstanding against only one side whereas in an 'executory consideration' it is outstanding on both ends.

Front 44

What is executed consideration?

Back 44

Executed consideration applies to cases of unilateral contracts only. In this type of contract, the contract does not come into being until the offer is accepted, the acceptance usually being an act. The act will also constitute the consideration for the contract and performance by the person carrying out the act. Present consideration. Consideration which moves simultaneously with the promise, is called 'present consideration' or 'executed consideration'. For example, A sells and delivers a book to B, upon B's promise to pay for it at a future date. The consideration waiting from A is present or executed consideration since A has done his act of delivering the book simultaneously with the promise of B. It should, however, be noted that it is said to be . 'present consideration' when at the time of the agreement it is executed on one side and executory on the other. If both parties have done their part under the contract, e.g., where A sells a book to B and B pays its price immediately, it is a case of executed contract (where nothing remains to be done) and not of executed or present consideration.

Front 45

What is past consideration?

Back 45

Past consideration is a third type of consideration. In general past consideration is no consideration. It involves an act carried out before the promise is made. However there are certain circumstances in which past consideration will amount to sufficient consideration. Consideration must move from the promisee to the promisor. This means that a party who has provided no consideration cannot enforce the contract. Exceptions to this rule include situations where a promise is made to two or more people as a group, where consideration provided by one will allow the others to enforce the promise. Past consideration. When something is done or suffered before the date of the agreement, at the desire of the promisor, it is called 'past consideration.' It must be noted that past consideration is good consideration only if it is given by the promisee, 'at the desire of the promisor. Under English law, past consideration is no consideration. In India sec 25(2) adequately covers a past voluntary service. Let us discuss some examples of this. Illustrations (a) A teaches the son of B at B's request in the month of January, and in February B promises to pay A a sum of Rs 200 for his services. The services of A will be past consideration. (b) A lawyer, gave up his practice and served as manager of a landlord at the latter's request in lieu of which the landlord subsequently promised a pension. It was held that there was good past consideration. (Shiv Saran vs Kesho Prasad)

Front 46

What is the doctrine of privity of contract?

Back 46

The doctrine of privity of contract involves a general rule that a person who is not a party to a contract cannot enforce the terms of the contract, neither can its terms be enforced against the third party. In certain cases there may be more than one agreement dealing with the same subject matter and in order to identify who the parties to the agreement or agreements are, it is a matter of construction from case to case.

Front 47

What are two exceptions to the doctrine of privity of contract?

Back 47

Statute and Agents

Front 48

Describe the statute exception to the doctrine of privity of contract

Back 48

Certain statutes provide for an exception to the rule that only the parties to a contract may enforce it or that the contract may be enforced against them. An example of such a statute is the Road Traffic Act 1961 which allows a third party to recover under an insurance policy.

Front 49

Describe the agent exception to the doctrine of privity of contract

Back 49

An agent is an individual who has capacity to enter into certain transactions or agreements on behalf of another person who is the principal. For example, in certain arrangements, a third party will be able to rely on limitation clauses in a contract where certain criteria have been satisfied. A House of Lords case of Midlands Silicones Ltd v Scruttons Ltd [1962] AC 446 stated that the criteria to be met included: • that it is made clear that protection under the contract extends to the third party; • it is clear that the contracting party also contracts as an agent for the third party and has been given that authority to act as such by the third party; • consideration must move from the third party.

Front 50

What is the significance of House of Lords case of Midlands Silicones Ltd v Scruttons Ltd [1962]?

Back 50

A House of Lords case of Midlands Silicones Ltd v Scruttons Ltd [1962] AC 446 stated that the criteria to be met included: • that it is made clear that protection under the contract extends to the third party; • it is clear that the contracting party also contracts as an agent for the third party and has been given that authority to act as such by the third party; • consideration must move from the third party.

Front 51

What are the seven items listed under Contents of the Contract in the handbook?

Back 51

1. Express Terms, 2. Implied Terms, 3. Presumed Intention of the Parties, 4. Implied by Law, 5. Exclusion Clauses, 6. Interpretation of Exclusion Clauses, 7. Subject to Contract

Front 52

In terms of a contract, what are Express and Implied Terms

Back 52

The terms contained in a contract may be categorised as either express or implied. Express terms are those which the parties to the contract have expressly agreed among themselves, while implied terms are those which are either implicitly agreed by the parties or are implied in the contract by law or policy.

Front 53

What may Express Terms be broken down into?

Back 53

Express terms may be further broken down into categories of warranties and representations.

Front 54

In contract law, contrast warranties and representations

Back 54

A warranty will be considered to be a term of the contract, while a representation will not. Factors such as the position of the party making the statement (whether they are in a position to verify the correctness of the statement) and the specificity of the statement (if it is precise then it is more likely to be regarded as a warranty rather than a representation) are used in determining if an express term is to be considered to be a warranty or a representation.

Front 55

Implied terms will be regarded as forming part of a contract in what situations?

Back 55

Implied terms will be regarded as forming part of a contract in two general situations; where the parties did not expressly agree to a term but it was present in their minds at the time of agreeing the contract i.e. it represents the presumed intention of the parties, and where the law implies a term, irrespective of the parties' intentions.

Front 56

What have courts done in the past in terms of determining the presumed intention of the parties?

Back 56

In determining the presumed intention of the parties, different tests have been applied by the courts. The tests include: • Custom and practice test : involves an examination of whether a particular custom or practice exists in the area of business to which the contract relates. A term will not be implied under this test if it is inconsistent with an express term in the contract. • The business efficacy test : involves an examination of whether it is necessary to imply a term in order to give business effect to an express term contained in the contract.• The officious bystander test : involves an examination of whether something is so obvious that it goes without saying, so that if an officious bystander was present at the time the parties were making their bargain and suggested a provision for it in the contract, the parties to the agreement would be in a position to readily agree that it should be included.

Front 57

What does Implied by Law mean in terms of contract law?

Back 57

Terms may be implied by law irrespective of the intention of the parties to the agreement. The courts may have adopted a practice of implying terms in certain categories of contracts. Statutes can also automatically imply terms into certain categories of contracts. However in certain cases, these implied terms may be varied by the parties providing that rules are complied with.

Front 58

What are Exclusion Clauses in the context of contract law"

Back 58

Exclusion clauses are designed to limit the obligations of one party or to limit remedies available in the event of a breach of the contract. In deciding whether an exemption clause forms part of a contract, factors such as the point at which the contract was concluded, and whether sufficient notice of the exclusion clause was given will be examined. If the contract has been concluded and one party is not aware of the existence of the exemption clause, then the clause may not form part of the contract. The general rule is that notice of the clause must be given before the contract is concluded. In addition to this rule, reasonable steps must be taken to bring the clause to the attention of the other contracting party. What is considered reasonable and sufficient will depend on the type of clause at issue and the surrounding circumstances. In general, the more demanding the term the greater the effort that must be made to bring it to the attention of the other party.

Front 59

What is important about the Interpretation of Exclusion Clauses in the context of contract law?

Back 59

The question as to what type of breach the exclusion clause is intended to cover is one of interpretation. Rules have been developed to aid interpretation. One of these rules is the contra proferentem rule, which is applied where a clause is not entirely clear and is capable of having different meanings. The clause will then be construed against the person who drafted the contract and who is seeking to rely on the clause as they had a clear opportunity in drafting the contract to ensure it was unambiguous and provided the necessary clarity.

Front 60

What is the contra proferentem rule?

Back 60

[Wikipedia] Contra proferentem (Latin: "against [the] offeror"), also known as "interpretation against the draftsman", is a doctrine of contractual interpretation providing that, where a promise, agreement or term is ambiguous, the preferred meaning should be the one that works against the interests of the party who provided the wording. The doctrine is often applied to situations involving standardized contracts or where the parties are of unequal bargaining power, but is applicable to other cases

Front 61

What is 'Subject to Contract' in the context of contract law?

Back 61

In certain cases both parties to an intended contract may wish to protect themselves by providing that a contract will not be binding on them, e.g. in contracts for the sale of land a purchaser may wish to make the sale conditional on the granting of planning permission. In such instances the term "subject to contract" will be included. The effect of its inclusion is that no formal contract is in existence. The phrase generally indicates that the parties are still in the process of negotiations and no agreement has yet been reached.

Front 62

A contract may be discharged - how?

Back 62

A contract may be discharged in a number of ways: • Through performance of obligations under the contract. The parties must perform their obligations in full. However, in certain circumstances where there is substantial compliance, this may be regarded as sufficient performance of the contract. What will qualify as substantial compliance will depend on the facts. • A contract may be discharged where a breach occurs depending on the nature of the breach. The contract however does not automatically come to an end. The non-offending party has the option whether to treat the contract as being at an end or whether to consider it as remaining in existence. If a decision is taken to regard the contract as remaining in existence then damages can be recovered for any loss incurred as a result of the breach.

Front 63

What is a breach of contract?

Back 63

A breach will be deemed to be sufficient to bring the contract to an end where for example there is a fundamental breach - the breach is so serious that the affected party is entitled to bring the contract to an end. A sufficient breach of the contract may also occur where one party makes a decision not to perform their obligations under the contract. In such circumstances, the affected party is entitled to treat the contract as at an end. • The contract may be discharged through agreement - the parties to a contract may come to a mutual agreement to terminate it. • The contract may be discharged due to frustration. In its simplest terms frustration occurs where circumstances arise that make the operation of the contract impossible due to no fault of the parties to the contract, the contract may then be considered at an end. A change in circumstances may arise in a variety of ways, for example, where the reasons for putting the contract in place in the first instance have become redundant, or where changes in governing law render the contract redundant. If a contract comes to an end due to frustration, the rights and obligations which existed up to the date of the frustration remain intact, however future obligations are suspended.

Front 64

What are the remedies for a breach of contract?

Back 64

Remedies for breach of a contract Various remedies are available where there is a breach of contract. What type of remedy is available may be dependent on what the surrounding circumstances are.

Front 65

Describe damages further on the context of contract law

Back 65

One of the most common remedies for breach of a contract is an award of damages. An award of damages is considered as a form of compensation and the purpose of an award of damages under contract law is to put the person in the position they would have been in if the contract had been completed.

Front 66

Are damages always recoverable in the event of a breach of contract?

Back 66

Damages will not always be recoverable in the event of a breach. Certain damages will be considered too remote to be recoverable. The leading case in this area is that of Hadley v Baxendale (1854) 9 Ex 341, where the court held that damages that could be recovered were: • such as would flow from a particular breach of contract; or • such as may reasonably have been supposed to be in the contemplation of both parties, to be a probable result of a particular breach.

Front 67

What is the significance of Hadley v Baxendale in terms of whether damages are always recoverable?

Back 67

Damages will not always be recoverable in the event of a breach. Certain damages will be considered too remote to be recoverable. The leading case in this area is that of Hadley v Baxendale (1854) 9 Ex 341, where the court held that damages that could be recovered were: • such as would flow from a particular breach of contract; or • such as may reasonably have been supposed to be in the contemplation of both parties, to be a probable result of a particular breach.

Front 68

What does Heads of Loss mean in the context of contract law?

Back 68

(Wikipedia, not handbook) In contract law or tort law, the term heads of loss or heads of claim refers to categories of damage that a party may incur. It uses the term "head" in its sense of "category"; each head of loss refers to the damages that correspond to a particular category of duty.

Front 69

What is the significance of Hadley v Baxendale in terms of identifying the heads of loss aka heads of claim?

Back 69

The case of Hadley v Baxendale identifies the types of loss under which recovery is possible. These include expectation loss, this involves the expected profit which would have been earned if the contract had been completed, and reliance loss, which is any loss incurred where further expenditure was made in reliance on the contract. A third category of loss identified by the court in the case was restitution loss, which occurs where one party confers a benefit on the other and the other then fails to perform the contract. When deciding what amount of damages will be awarded for a breach of contract, the person who has suffered loss is under a duty to mitigate their loss.

Front 70

What is rescission? At whose discretion is rescission?

Back 70

Rescission is a remedy, the effect of which is to place the parties back in the position they were in before the contract was entered into. Rescission as a remedy is equitable, therefore it is at the discretion of the courts whether to award it or not.

Front 71

Is rescission, as a remedy, always available in the context of contract law?

Back 71

Rescission is only available in certain circumstances, for example in the event of mistake, i.e. where the parties enter an agreement on foot of a mistaken belief, or in certain cases of misrepresentation. Misrepresentation at its simplest occurs where a statement of fact is made before the contract is entered into and the statement subsequently turns out to be false.

Front 72

What is 'specific performance' in the context of contract law?

Back 72

Specific performance like rescission is an equitable remedy and so is discretionary. The effect of the remedy is to instruct a party to carry out their obligations under the contract. A number of rules have emerged which govern its award. Firstly, it will not be granted where damages are an adequate remedy. Damages will not be considered an adequate remedy where they are impossible to quantify or where the damages would be nominal. Specific performance will not be granted where it would prove impossible to enforce, such as in the case of personal service i.e. the court will not order persons to work together where they would not otherwise work, or where court supervision is required to ensure the contract is performed.

Front 73

What legislations govern the sale of goods and services in Ireland?

Back 73

One of the oldest pieces of Irish consumer legislation is the Sale of Goods Act 1893 (the "1893 Act"). The Act has been amended by the Sale of Goods and Supply of Services Act 1980 (the "1980 Act") and it is the 1980 Act which is now the main focus of consumer law.

Front 74

What effect does the 1980 law have on relevant contracts? When does this occur, i.e. the effect occurs under what conditions? Which section of this legislation does this?

Back 74

The effect of the 1980 Act is to imply the following terms into a contract for the supply of a service [Section 39, 1980 Act]; • that the supplier has the necessary skill to render the service; • that he will supply the service with due skill, care and diligence; • that where materials are used, they will be sound and reasonably fit for the purpose for which they are required; and • where goods are supplied under the contract, they will be of merchantable quality. The above provisions apply where a party entering into a contract does not do so in the course of a business or hold himself out as doing so, and where the supplier is acting in the course of business.

Front 75

Can the implied term that are created by legislation governing the sale of goods and services ever be excluded or varied? What is the relevant section of this legislation?

Back 75

The terms outlined above can be excluded or varied in circumstances where there is express agreement or where this can be inferred from a course of dealings or by usage which binds both parties. If however the contract is with a consumer, terms may be excluded or varied as long as they have specifically been brought to the attention of the consumer and are fair and reasonable [Section 40, 1980 Act]. Under the terms of the 1980 Act, regard is to be had in particular when determining reasonableness to: • the bargaining positions of the parties; • whether the consumer received any inducements; • whether the consumer knew or ought reasonably to have known of the existence of the term; • where exclusion of a term is based on compliance with a condition, whether compliance with that condition might be impracticable; or • whether the service was provided to the special order of the consumer.

Front 76

Where a vendor sells goods in the course of a business, a number of terms are implied into the contract. Which of these are mentioned in the handbook and under what legislation/section?

Back 76

Where a vendor sells goods in the course of a business, a number of terms are implied into the contract. These include: Good Title [Section 12], Sale by Description [Section 13], Goods are of merchantable quality [Section 14], and Sale by Sample [Section 15] as per the Sale of Goods Act 1893 (the "1893 Act")

Front 77

In terms of contract law, describe what is 'Good Title'

Back 77

Terms are implied into the contract that the vendor has good title to sell the goods at the time of the sale or at the time when the contact is performed and that the goods are free from encumbrances [Section 12, 1893 Act]. Problems can arise as to the point at which the purchaser becomes the owner of the goods i.e. at what point does title pass? The 1893 Act provides that property to the goods passes in accordance with what is agreed by the parties. However, if there is silence as to this issue, the Act provides that property in relation to specific goods will pass: • at the time of sale, if goods are in a deliverable state, if not, then at the time when they are in a deliverable state and the purchaser is on notice of this;• if the goods are weighted, before they are priced and the purchaser is on notice of this; • where goods are sold on approval, then property passes where the purchaser indicates that they are accepting the goods.

Front 78

In terms of contract law, describe what is 'Sale by description'

Back 78

[Section 13, 1893 Act] Where goods are sold by description, then they must correspond with the description. If this is not complied with, then the contract may be rescinded.

Front 79

In terms of contract law, describe what is 'Goods are of merchantable quality'

Back 79

The Act implies a condition of merchantable quality when goods are sold in the course of a business [Section 14, 1893 Act]. Goods are regarded as being of merchantable quality where they are as fit for the purpose or purposes for which goods of that kind are commonly bought and as durable as it is reasonable to expect having regard to any description applied to them, the price and all other relevant circumstances [Section 14(3), 1893 Act]. Where a defect is specifically brought to the attention of the purchaser or where the purchaser inspects the goods prior to purchase, then the term will not be implied. Also if a situation arises where the buyer of goods expressly or by implication makes it known to the seller the purpose to which they intend to put the goods then a condition will be implied that the goods supplied are reasonably fit for that purpose, even though that purpose is not one for which the goods are usually supplied. An exception to this rule arises where it can be shown that the purchaser does not rely, or that it would be unreasonable for him to rely, on the seller's skill or judgment.

Front 80

In terms of contract law, describe what is 'Sale by Sample'

Back 80

[Section 15, 1893 Act] If goods are sold by sample, then the 1893 Act requires that the bulk supplied must correspond with the sample. A reasonable opportunity must be given to the purchaser to examine the sample. Where the bulk does not correspond with the sample, then it will be considered of unmerchantable quality.

Front 81

May the implied terms, inserted by the 1893 Act, ever be excluded?

Back 81

Any attempt to exclude implied terms in relation to merchantable quality, sale by description or sale by sample will be void where the contract is a consumer contract, while any attempt to exclude these implied terms must be fair and reasonable in commercial contracts. Clauses which seek to exclude implied terms in relation to the seller's title or implied title will be void irrespective of the type of contract at issue

Front 82

Where a customer purchases goods by entering an agreement with a finance house, what is the effect of this relationship in terms of contra law?

Back 82

Where a customer purchases goods by entering an agreement with a finance house, which is acting in the course of its business, to repay the money paid by the finance house to the seller in respect of the price of the goods, then the finance house is deemed to be a party to the sale. Both the finance house and the seller will be jointly and severally liable to the buyer in the event of breach of the contract.

Front 83

What provisions around guarantees does the 1980 Act have (quote sections)?

Back 83

The 1980 Act also contains provisions which deal specifically with guarantees. Section 15 of the 1980 Act defines a guarantee as a written statement, supplied by the manufacturer/supplier in connection with the supply of goods, stating that he will service, repair or otherwise deal with the goods following purchase. The guarantee must be set out in a legible manner and must contain certain items of information such as the duration of the guarantee and the name and address of the guarantor [Section 16, 1980 Act 118 Article 2].

Front 84

What legislation deals with unfair terms in consumer contracts?

Back 84

The European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 (the "Regulations") were introduced in Ireland to implement Council Directive 93/13/EEC (the "Directive").

Front 85

What is the purpose of the Unfair Terms Regulations?

Back 85

The purpose of the Directive was to afford a minimum level of protection to consumers in their contractual relationships, particularly where those contracts take a standard form.

Front 86

The Unfair Terms Regulations applies to contracts dated from when?

Back 86

The Regulations apply to contracts which came into being from 31 December 1994 onwards.

Front 87

Are all contracts governed by the Unfair Terms Regulations?

Back 87

Not all contracts will be affected by the Regulations and certain conditions must be met before a contract is covered. Firstly, the contract must be between a seller of goods or the supplier of a service and a consumer. Secondly, the Regulations explicitly provide that they are non-applicable to certain categories of contracts, for example they do not apply to contracts relating to family law or succession rights [Schedule 1].

Front 88

How is a consumer defined in the Unfair Terms Regulations and what is the effect of this definition?

Back 88

A consumer is defined in Section 2 as: "A natural person who is acting for purposes outside his business". By virtue of this definition, a company cannot rely on the Regulations as it does not come within the definition of a consumer.

Front 89

What is the Fairness Test under the Unfair Terms Regulations

Back 89

The Regulations apply a fairness test to contractual terms that have not been individually negotiated, where one of the parties to the contract is a consumer. The concept of "consumer" is confined to natural persons who are acting outside their trade or profession.

Front 90

Does the Unfair Terms Regulations apply even when contract has been individually negotiated with a consumer? Quote Article

Back 90

If a term or an aspect of a term has been individually negotiated, the Regulations will still apply to the remainder of the contract [Article 6]. The burden of proof rests with the contractor and not the consumer, to prove that the term was individually negotiated.

Front 91

Under the Unfair Terms Regulations, when is a term in a contract regarded as not having been individually negotiated (what article)?

Back 91

A term will be regarded as not having been individually negotiated when it has been "drafted in advance and the consumer has not therefore been able to influence its substance" [Article 3 (4)].

Front 92

Give some examples of unfair terms that may be inserted in contracts

Back 92

Examples of unfair terms in contracts include clauses which charge the consumer a disproportionately large sum if they do not fulfil any of their obligations under the contract or cancels the contract or clauses which require the consumer to fulfil all of his / her contractual obligations, while letting the firm avoid its own.

Front 93

What is a key requirement under the Unfair Terms Regulations, under which article, and how is it defined?

Back 93

A requirement under the Regulations is that terms should not be 'unfair'. What qualifies as an unfair term is broadly defined under the Regulations. A term will be regarded as unfair if: "contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer, taking into account the nature of the goods or services for which the contract was concluded, and all the circumstances attending the conclusion of the contract and all other terms of the contract or of another contract on which it is dependent" [Article 3 (2)].

Front 94

What must be taken into account under the Unfair Terms Regulations when main assessment of good faith? Where is this found in these regulations?

Back 94

The Regulations provide that the following should be taken into account when making an assessment of good faith: • the strength of the bargaining positions of the parties; • whether the consumer had an inducement to agree to the term;• whether there was a special order by the consumer; and • the extent to which the contractor has dealt fairly and equitably with the consumer, whose legitimate interests he has to take into account [Schedule 2].

Front 95

What does Schedule 3 of the Unfair Terms Regulations contain? Does usage of

Back 95

Schedule 3 of the Regulations includes a non-exhaustive list of terms which may be regarded as unfair (the grey list)

Front 96

Does the inclusion of any of the terms in the grey list of the Unfair Terms Regulations in a contract raise any concerns?

Back 96

While the inclusion of any of the terms in the grey list in a contract does not necessarily raise any presumption of unfairness, the list serves as a useful technical guide to what types of terms the legislation seeks to eradicate from consumer contracts.

Front 97

To what does the fairness requirement of the Unfair Terms Regulations not apply (quote article)? If unfair terms are used in a contract, is the contract void or what happens?

Back 97

The fairness requirement does not apply to terms which define the subject-matter of the contract or to those terms regarding price or remuneration [Article 4]. An unfair term will not be binding. However, the rest of the contract, if it is capable of existing without the unfair term, will continue in force.

Front 98

What is the Plain and Intelligible Language Requirement under the Unfair Terms Regulation (quote article)? To which terms does this apply?

Back 98

The Regulations require all terms to be in plain and intelligible language [Article 5 (1)]. This requirement applies to both core and non-core terms

Front 99

If a term of a contract is found to be ambiguous or confusing under the Unfair Terms Regulations, is the contract void or what happens? Quote article

Back 99

If a term of a contract is found to be ambiguous or confusing the interpretation most favourable to the consumer will prevail, in accordance with the contra proferentem rule [Article 5 (2)].

Front 100

What is the Distance Marketing Directive and when did it come into effect in Ireland?

Back 100

Since February 2005, suppliers of financial services in Ireland are obliged to comply with the requirements under the "Distance Marketing Regulations" EC (Distance Marketing of Consumer Financial Services) Regulations 2004, which implement EU Directive 2002/65 on the distance marketing of consumer financial services

Front 101

What does the Distance Marketing Directive do and why is it relevant to contract law?

Back 101

The Directive establishes a framework that provides for the regulation of the distance marketing/selling of financial services and the protection of consumers from misleading and aggressive practices in this industry. The salient features of the Distance Marketing Regulations relate to the pre-contract disclosure, by the supplier, and a right of cancellation for the consumer.

Front 102

In order that a contract comes within the scope of the Distance Marketing Regulations, it must have what four characteristics as per which specific regulation within the regulations?

Back 102

In order that a contract comes within the scope of the Distance Marketing Regulations, it must have the following characteristics: 1. Between a supplier and a consumer, 2. Supply financial services, 3. Be supplied under an organised distance sales, or service provision scheme operated by the supplier, and 4. take place through the means of distance communications [Regulation 3(1)].

Front 103

In order that a contract comes within the scope of the Distance Marketing Regulations, it must have four certain characteristics - describe further the first, that it must occur between a supplier and a consumer

Back 103

It must be between a supplier, defined as someone who in the course of a business, provides consumer financial services under distance contracts for the supply of such services, and their assignees, and a consumer, defined by the Regulations as a "natural person who is acting otherwise than in the course of a business". This definition excludes companies from being consumers for the purpose of the Regulations

Front 104

In order that a contract comes within the scope of the Distance Marketing Regulations, it must have four certain characteristics - describe further the second, that it must involve supply financial services

Back 104

The contract must concern the supply of financial services. Included under the definition of "financial service" is any service normally provided in the ordinary course of carrying on a banking business, an insurance business (including life assurance) or a business providing credit, personal pensions, an investment service or a payment service

Front 105

In order that a contract comes within the scope of the Distance Marketing Regulations, it must have four certain characteristics - describe further the third, that it must supplied under an organised distance sales, or service provision scheme operated by the supplier

Back 105

The service must be supplied under an organised distance sales, or service provision scheme operated by the supplier, which excludes once-off transactions

Front 106

In order that a contract comes within the scope of the Distance Marketing Regulations, it must have four certain characteristics - describe further the fourth, that it must take place through the means of distance communications

Back 106

The transaction and the contract must take place through the means of distance communications, defined as "any means that enables persons to communicate with each other when they are not in each other's presence". This would cover telephone, internet based or email exchanges

Front 107

Under the Distance Marketing Directive, what must the supplier provide in writing and when?

Back 107

Before entering into a distance contact, the supplier must provide a consumer with the terms of the contract, in writing. If the means of distance communication used does not allow the terms of the contract to be given (for example in the case or motor or travel insurance, where cover is required immediately), the supplier may comply with this obligation immediately after the contract is entered into.

Front 108

Describe broadly the information that must be supplied to consumers under the Distance Marketing Directive

Back 108

A long list of information must be given to the consumer "within a reasonable time" before a consumer is bound by a distance contract. Broadly speaking this information falls into four categories: • Information about the supplier; • Information about the service offered; • Contact details of the supplier; and • The redress process in the event of a consumer complaint [Schedule 1].

Front 109

Under the Distance Marketing Directive, describe three requirements imposed on the information presented to the consumers by the supplier

Back 109

The Distance Marketing Regulations require the information to be provided in a clear and comprehensible way. It also must be easily and directly accessible and have the ability to be stored in a 'durable medium'. A durable medium allows for the user to retain the information for future access and enables the information to be reproduced in an unchanged form e.g. a pdf file.

Front 110

Under the Distance Marketing Directive' what are the requirements when contact is by telephone?

Back 110

Where contact with the potential consumer is by telephone, recognising that it would not be practicable to have the long list of information in the Distance Selling Regulations read to the consumer, special rules apply. A smaller list of about a dozen or so pieces of information may be given in that telephone conversation provided the consumer "explicitly consents" to receiving this lesser amount of information. In any event, full contract details must be sent to the consumer, immediately after the contract is concluded by telephone

Front 111

If a contract contravenes the Distance Marketing Directive, what is the effect?

Back 111

Any contract for the supply of a financial service to a consumer that contravenes the information requirements of the Distance Marketing Regulations is unenforceable against the consumer. However a court of competent jurisdictions may decide that the agreement is enforceable even if it does not fully comply with the Regulations, where it is satisfied: • that the failure to comply was not deliberate and has not prejudiced the consumer and; • that it would be just and equitable in the circumstances to dispense with the obligation

Front 112

What are cancellation rights under the Distance Marketing Directive?

Back 112

The Regulations also provide consumers with a cooling-off period during which they can cancel the contract without penalty, although there are some exceptions to this. The notice of cancellation must be in writing or other durable means and show a clear intention to cancel the contract. This is intended to give the consumer the right to reflect and consider the terms of the proposed financial services contract.

Front 113

What is the cancellation period?

Back 113

The cancellation period is 14 days for financial services with an exception of 30 days for contracts for insurance (including life insurance) and personal pensions.

Front 114

If the supplier did not comply with information requirements under the Distance Marketing Regulations, what is the effect on cancellation rights?

Back 114

Further, if the supplier does not comply with information requirements under the Distance Marketing Regulations, the cancellation period exists for an indefinite period.

Front 115

Under the Distance Marketing Directive, when do cancellation rights commence?

Back 115

Note the cancellation period for the contract begins on the date on which the contract is entered into or on the date that the consumer received in writing (or other durable medium that is accessible to the consumer) the contract terms and conditions, whichever is the later.

Front 116

What are exceptions to the cancellation rights under the Distance Marketing Directive?

Back 116

The exceptions to the right to cancel include housing loans or foreign exchange transactions, issues or transfers of transferable securities or issues or transfers of units in collective investment schemes, or other financial transactions where the price moves constantly or where the price of the service is subject to market fluctuations beyond the suppliers control during the cancellation period. This is to prevent consumers using the cancellation period for speculative purposes.

Front 117

If a contract is cancelled in accordance with the Distance Marketing Regulations, what is the supplier obliged to do? Is there any exception here?

Back 117

If a contract is cancelled in accordance with the Distance Marketing Regulations, the supplier is obliged to refund all monies paid by the consumer. The important exception to this is that the supplier may charge for any service actually supplied in accordance with the contract. Similar obligations are placed on the consumer to refund any money paid or any property given by the supplier.

Front 118

What are miscellaneous provisions of the Distance Marketing Directive that the handbook mentions? Quote applicable specific regulations

Back 118

The Distance Marketing Regulations also deal with: • Unsolicited services [Regulation 19]; and • Cold calling [Regulation 20]. The Distance Marketing Regulations provide that consumers of an unsolicited service are under no obligation to pay for the service unless they have notified the supplier that they are willing to be supplied with the service. Furthermore, it is an offence for a supplier of such a service to demand payment or takes steps to seek payment for such an unsolicited service. With regard to cold calling, a consumer's consent is necessary before a supplier can communicate with them using an automated calling system without human intervention or a fax.

Front 119

How was the Unfair Commercial Practices Directive transposed into Irish law?

Back 119

The Consumer Protection Act 2007 provides for the establishment of a National Consumer Agency and facilitates the transposition of the Unfair Commercial Practices Directive (Directive 2005/29/EC).

Front 120

What did the Consumer Protection Act 2007 do in terms of transposing the requirements of the Unfair Commercial Practices Directive?

Back 120

The Consumer Protection Act 2007 makes new provisions in relation to pyramid selling schemes as well as provisions to prohibit unfair commercial practices as defined by the Unfair Commercial Practices Directive (Directive 2005/29/EC).

Front 121

What unfair commercial practices did the Unfair Commercial Practices Directive prohibit?

Back 121

The Unfair Commercial Practices Directive (Directive 2005/29/EC) prohibits: • unfair commercial practices; • misleading commercial practices; • aggressive commercial practices; • a specified range of 23 blacklisted misleading practices and aggressive practices that are regarded as unfair in all circumstances.

Front 122

Outside the relevant directive transposition, what other provisions did the Consumer Protection Act 2007 include

Back 122

The Consumer Protection Act 2007 also contains provisions in relation to price display for goods and services and also in relation to advertisements, and the Minister may make regulations requiring for specified information to be included in such advertisements.

Front 123

The handbook describes the Consumer Protection Act 2007 as what?

Back 123

The Consumer Protection Act 2007 is the most wide-ranging amendment and update to Irish consumer law since 1980 and includes an extensive set of protections for consumers that must now be taken into account by all traders and service providers when marketing and distributing their products.

Front 124

Do the prohibitions within the Consumer Protection Act 2007 extend only to goods?

Back 124

Most of the prohibitions included in the Act extend to both goods and services, since the term "product" for the purposes of the Act is defined to include both goods and services.

Front 125

What is the definition of services within the Consumer Protection Act 2007?

Back 125

"Services" for the purposes of the Act extends to include insurance, banking, credit facilities and other typical financial services.

Front 126

What does Section 41 of the Consumer Protection Act 2007 do?

Back 126

Section 41 of the 2007 Act contains a general prohibition on unfair commercial practices. According to section 41, a trader is not permitted to engage in an unfair commercial practice. The term "trader" for these purposes is any person that is acting for purposes related to that person's trade profession or business, and therefore extends to all providers of commercial services. A commercial practice is regarded as "unfair" for the purposes of section 41 if contrary to either the standard of good faith that would normally apply in the trader's field of commercial activity or the standard of skill and care that the trader would normally be expected to apply to consumers, it causes appreciable impairment of a consumer's ability to make a decision and might cause that consumer to make a decision that he would not otherwise have made.

Front 127

What does Section 42 of the Consumer Protection Act 2007 do?

Back 127

Section 42 of the 2007 Act generally prohibits misleading commercial practices. Sections 43 to 46 of the Act specify the circumstances in which a commercial practice will be regarded as misleading. These include the provision of false deceptive or misleading information to consumers that influence their decisions, any practice that might cause a consumer to confuse the trader's product with a competitor's product, and representing that the trader is bound by a code of practice which he subsequently does not comply with.

Front 128

What does Section 48 of the Consumer Protection Act 2007 do?

Back 128

Section 48 of the Act prohibits a trader from representing that he will accept payment by more than one method and then making a surcharge for choosing one method over another. A surcharge is imposed where the price charged to the consumer when using one method exceeds that charged when using another. The methods of payment covered by the section are cash payments, credit card payments and debit card payments.

Front 129

What does Section 52 of the Consumer Protection Act 2007 do?

Back 129

Section 52 of the Act prohibits aggressive commercial practices. A commercial practice is aggressive if by harassment coercion or undue influence it might cause significant impairment to the average consumer's ability to make a free choice of product and cause the average consumer to make a decision that he would not otherwise have made.

Front 130

What does Section 55 of the Consumer Protection Act 2007 do?

Back 130

Section 55 of the Act includes a long list of prohibited commercial practices, which include representing that the trader has an endorsement that he does not have and making any invitation to purchase a product without having reasonable grounds to believe at the time that the invitation is made that the trader can supply it or can procure another trader to supply it.

Front 131

The Act makes it a criminal offence for traders to engage in what sort of commercial practices? Who has authority to bring summary prosecutions? What about civil proceedings?

Back 131

The Act makes it a criminal offence for traders to engage in unfair, misleading, aggressive or prohibited commercial practices and the National Consumer Agency has power to bring summary prosecutions for offences. Consumers also have the right to bring civil proceedings for damages for breach of certain provisions of the Act. The National Consumer Agency and certain other designated public bodies have power to bring proceedings in court to obtain prohibition orders preventing traders from continuing with practices that are prohibited by the Act.

Front 132

Analyse the basic elements of a legally binding contract.

Back 132

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Front 133

Evaluate when a party may sue to enforce a contract and when it may not do so.

Back 133

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Front 134

Explain the difference between an "express" and an "implied" term in a contract.

Back 134

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Front 135

Assess the circumstances in which a contract can be discharged.

Back 135

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Front 136

Outline the remedies for breach of a contract.

Back 136

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