UCL FACULTY OF LAWS

CONTRACT TUTORIALS
2010/11

Summary:

1. Weeks 9 &10 Offer and Acceptance

2. Week 11 Reading Week (no tutorials)
3. Weeks 12 & 13 Consideration, Intention and Promissory Estoppel
4. Weeks 14 & 15 Mistake & Misrepresentation

5. Week 16 No tutorials

6. Week 20 Mid-sessional Examination

Week 21& 22 Duress and Undue Influence
7. Weeks 23 & 24 Terms
8. Week 25 Reading Week
9. Weeks 26 & 27 Performance, Breach & Frustration
10. Weeks 28 & 29 Remedies
 Tutorial 1

OFFER AND ACCEPTANCE

Reading:
McKendrick Text and Materials, Chs 2 & 3.

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

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

On 2nd October Galvatron PLC sends identical letters to three

local firms asking if they wish to buy an unused widget making
machine that they have acquired. The letters state that “the
best offer received by 9.30am on 10th October will secure the
machine.”
The following day Prime PLC sends a fax saying: “Is it a 5XL
model? If so we will offer $5000, if not, $3000.” Unfortunately
due to a transmission fault, the final ‘0’ is missing so that the
last figure appears to be $300. The machine is not a 5XL.
Optimus PLC sends a letter offering $2500 or $100 more than
your highest offer you receive under $3500.”
Megatron PLC sends a telex on the evening of the 9th October
offering $3500. The offer is received on Galvatron’s telex
machine at 6pm on 9th October, but not read until 10.30am on
10th October.

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Advise Galvatron whether it is obliged to sell the widget
making machine and if so, to whom.

Further reading:
Treitel 12th ed: Ch 2.

In your own time, consider how you might answer the

following problem question

Harry is a property developer. Although he has done well in

the past, 2008-9 has been a very difficult time for him and his
business is struggling. He is trying to obtain a loan, but the
banks are reluctant to lend money to him so far. Bryony works
for a hedge fund as a market analyst and has known Harry in
a business capacity for several years.
Harry and Bryony meet for dinner to discuss Harry’s financial
situation. Bryony expresses concern and asks whether she
can assist Harry to obtain the finance. Harry suggests that
Bryony could obtain a loan for £50,000 on his behalf. He
states that if she is successful in obtaining a satisfactory loan
he will pay her £1000 commission.
Bryony proceeds to investigate the possibility of obtaining the
loan and contacts many banks. Hi-Rate Bank plc replies by
letter stating they will offer her a loan, but only after she
comes into the bank to discuss the situation with their senior
lending advisor and sign the papers. On her way to her
appointment with the bank, Bryony receives a message on her
Blackberry from her secretary Agnes telling Bryony that Harry
has subsequently obtained a loan with Hi-Rate Bank plc and
that he will not pay the £1000 commission owed to Bryony.
Bryony does not read the message until after the meeting.
Bryony signs the loan papers with the bank and attempts to
claim the £1000 commission from Harry. Harry refuses to pay.
Advise Bryony.

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 Tutorial 2

CONSIDERATION, INTENTION TO CREATE LEGAL

RELATIONS & PROMISSORY ESTOPPEL

Reading:
McKendrick Text and Materials Chs 5 & 7
Important cases:
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1
QB 1
Pao On v Lau Yiu Long [1980] AC 614
Foakes v Beer (1884) 9 App Cas 605
In Re Selectmove Ltd [1995] 1 WLR 474.
South Caribbean Trading Ltd v Trafigura Beheer BV [2005] 1
Lloyds Rep 128
Balfour v. Balfour [1919] 2 K.B. 571
Esso Petroleum Ltd v Commissioners of Customs and Excise
[1976] 1 All ER 117
Hughes v. Metropolitan Railway Co. (1877) 2 App. Cas. 439
Central London Property Trust v. High Trees House Ltd.
[1947] K.B.130

Problem
Marion has her own cupcakes business, FairyCakesRUs. Her
key selling point is that her cakes are all made in her own
kitchen. Gradually Marion is building her business.
She has major contracts to supply cupcakes to two law firms:
Greedy, Grouch & Grumpy LLP and Slackers LLP. She is to
supply 100 chocolate cupcakes every week for a year to
Greedy, Grouch & Grumpy LLP and 50 assorted flavour
cupcakes every week for a year to Slackers LLP. Payment is
made by invoice to each firm at the end of each month on
each contract. The following events occur:
1. Marion makes 2 deliveries to Greedy, Grouch &
Grumpy LLP. Before the third delivery Marion realises
she has underestimated how much chocolate will be
required and she does not have enough for 100
cupcakes. Marion contacts Greedy, Grouch & Grumpy
LLP and informs them of the possible shortfall. The firm
then offer Marion an extra £200 if she is able to deliver
the 100 cupcakes on time. Greedy, Grouch & Grumpy
LLP are very keen that 100 cupcakes should be
delivered as they have a meeting with a very important
client who is about to sponsor their pro bono
programme for £400,000 and who loves cupcakes.
When Marion invoices the firm, they refuse to pay the
extra money.
2. Marion delivers a batch of cupcakes to Slackers LLP.
On delivery, the managing partner compliments her on
the quality of the cakes and tells her he remembers that
his favourite cupcakes, when he was a child, contained
fresh cream. Marion puts cream into 10 of the next

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 delivery of cupcakes and takes them to the firm the
following week. She sees the managing partner again
and he says, “Oh great, we will give you an extra £100
for doing that.” When Marion puts the additional £100
on her next invoice to Slackers LLP, they refuse to pay
her more than she was already entitled to under the
original contract.
3. Marion has significantly underestimated how difficult it
is to bake 50 assorted cupcakes a week for Slackers
LLP in addition to her contract with Greedy, Grouch &
Grumpy LLP. She therefore asks Slackers LLP whether
it is possible to deliver 30 cupcakes a week for 2
months until she has had a chance to put a kitchen
extension on her house and employ some extra staff to
help her. Slackers LLP agree and Marion starts building
work on her house. After 2 months, the new kitchen is
completed and Marion’s daughter, Frankie, comes to
work with her. Slackers LLP find out that Marion has a
new kitchen and is being helped by Frankie and insist
on her delivering the extra cakes she failed to deliver
under the original contract and also on delivery of 50
cupcakes a month from now on.
Advise Marion.

Further reading:
Treitel 12th ed: Ch 2 pp 74-130 & 135-146

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 Tutorial 3

MISTAKE AND MISREPRESENTATION

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

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

Problem
"Wings" is a business specialising in the charter hire of
aircraft. Bernard telephones "Wings" and makes enquiries
about hiring an aircraft for use in his engineering export
business. Bernard has 500 boat engines which he needs to
export to Canada by 30 June as part of a lucrative contract
with a Canadian pleasure boat company, "Ripple."
Bernard speaks to Andrew, the managing director of "Wings",
who tells Bernard that based on the weight of each boat
engine his aircraft can "comfortably carry 50 engines on each
flight." Based partly on this information and partly on an
assurance that Andrew gave Bernard as to the reliability of his
aircraft, Bernard enters into a contract with "Wings" for the hire
of one DC12 aircraft between 18 - 28 June for a hire of
£5,000. Bernard takes delivery of the DC12 aircraft on 18
June and loads it with 50 boat engines. The DC12 is unable to
lift off and the pilot informs Bernard that the engines are too
heavy.
Bernard telephones "Wings" who maintain that the DC12 is
perfectly capable of carrying 50 boat engines of the weight
described. Andrew's knowledge of the carrying capacity for the
DC12 is based upon the figure given for the aircraft in the
"Biggle's Register", a register of all aircraft, which is regarded
as highly accurate and authoritative in flying circles. If Andrew

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had consulted the DC12's ownership documents (which are
written in French) he would have discovered that the DC12
was not in fact capable of carrying a load of 50 boat engines
of that weight. Fearful of being unable to deliver the boat
engines to "Ripple" on time, Bernard returns the DC12 to
"Wings" and hires a replacement aircraft, which can carry 50
boat engines, from "Bluebirds" at a cost of £7,000 . Bernard
delivers all the boat engines to "Ripple" on time.
"Wings" are now demanding that Bernard pay the £5,000 hire
charges for the DC12. Bernard refuses to pay and also claims
compensation for the £7,000 hire charges he had to pay to
"Bluebirds."
Advise Bernard.
Would it make any difference to your answer if Bernard were
an aircraft enthusiast with an expert knowledge of DC12
aircraft?

In your own time, consider the answers to the following

questions on Mistake.

1. Is it helpful to make a conceptual distinction between

mistakes that negative consent and mistake that nullify
consent?

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

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

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

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

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

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

Several months later, Wallis discovers that the book was

never owned by Silvio Ruffino. It is in fact worth only £25.
He also discovers that Massimo’s had been sold a week
before he visited it. The new owner, Paolo, continued to

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 trade under the name Massimo’s as he was entitled to do
under the terms of the sale of the business. It was Paolo
himself who sold Wallis the book.

Advise Wallis.
Note:
We do not have time to discuss Mistake fully in the tutorials. This should
not be regarded as an indicator of whether Mistake will appear on the
summer examination or not.

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

TUTORIAL 4
DURESS AND UNDUE INFLUENCE

Reading:
McKendrick Cases and Materials: Chs 18 & 19
Further Reading:
Chen-Wishart "Loss Sharing, Undue Influence and Manifest
Disadvantage" (1994) 110 LQR 173-178
Important Cases:
Barton v Armstrong [1976] AC 104
The Evia Luck [1992] 2 AC 152
The Universe Sentinel [1983] 1 AC 366
Atlas Express v Kafco [1989] 1 ALL ER 641
R v Attorney General for England and Wales [2003] UKPC 22
DSND Subsea Ltd v Petroleum Geo-services ASA [2000] BLR
530
Royal Bank of Scotland Plc v Etridge (No.2), [2001] 3 WLR
1021(HL)
Halpern v Halpern [2007] EWCA 291

Discussion Question:
Roughage & Co are manufacturers of breakfast cereals. They
wish to take advantage of the new trend in low fat diets and
produce a new breakfast cereal. Roughage & Co have already
started designing the packaging for the new cereal, using a
company, Grabbit Inc, even though a director of Roughage &
Co was locked in the meeting room at Grabbit Inc with its
director and five large security people until he signed the
contract.
Publicity for the new cereal is put in place by Bryan, the
advertising director of Roughage & Co. Bryan enters into one
advertising contract for £3 million for a full page advert in
‘Knitters’ Monthly’ magazine to promote the new cereal.
Knitters’ Monthly’s current circulation figures per year are 150
copies and Roughage & Co need to sell over 10 million boxes
of cereals to make the new cereal a success.

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Bryan and the advertising executive of Knitters’ Monthly
belong to the same religious community.
Roughage & Co also enter into a contract for the supply of
bran for the new cereal with Sludge Plc. Unfortunately the
bran is delivered to the wrong storage depot and then stolen.
Sludge Plc threatens to withdraw the credit facilities extended
to Roughage & Co unless Roughage & Co pays for the stolen
bran. The contract between Roughage & Co and Sludge Plc
does not state that credit facilities should be available. As
there is a worldwide shortage of bran, Roughage & Co pays
for the stolen bran.
The production of the new cereal is proving far more
problematic than Roughage & Co first thought. Roughage &
Co now seek you advice whether they can withdraw from all
the contracts without incurring liability. Advise Roughage &
Co.

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 TUTORIAL 5
TERMS

Reading:
McKendrick Text and Materials Chs. 8, 9, 10, 13 & 14.
AND
Text of UCTA 1977 & Unfair Terms in Consumer Contracts
Regulations 1999.
**Please make sure you bring a copy of UCTA & UTCCRs
to the tutorial.**
Important cases:
Parker v South Eastern Railways (1877) 2 CPD 416
Olley v Marlborough Court Ltd. [1949] 1 KB 532
Canada Steamship Lines Ltd v The King [1952] AC 292
Granville Oil and Chemicals Ltd v Davies Turner & Co Ltd
[2003] 1 ALL ER 819 (CA)
R & B Customs Brokers Ltd. v United Dominions Trust Ltd.
[1988] 1 WLR 321
DG of Fair Trading v First National Bank Plc [2002] 1 ALL ER
97
OFT v Abbey National [2009] 3 WLR 1215 (Supreme Court)

Problem:
Ferdinand and his wife Isabel decide to go on a swimming
holiday to Ipswich. They visit their local tour operator, Holidays
R Us, who arrange a luxury swimming break at Hotel Idyll in
Ipswich for them. Ferdinand signs the booking form in
Holidays R Us’ offices and pays £50 deposit for the hotel. The
remaining £100 is payable to Holidays R Us at the end of the
holiday.
On arrival at the hotel, there is no swimming pool and Isabel’s
diamond ring is stolen when the hotel cleaner leaves the hotel
room door unlocked. Ferdinand is furious. He refuses to pay
the additional £100 and also wishes to recover the £50 he has
already paid to Holidays R Us.
Holidays R Us refuse to refund the £50 and demand payment
of the remaining £100 plus £75 for late payment of the final
sum. When Ferdinand complains, Holidays R Us point to the
following terms and conditions on the back of their holiday
booking form:
“1.1 Holidays R Us limit their liability to £20 for any loss or
damage to property howsoever caused.
1.2 An administration fee will be charged on all late
payments.”
Ferdinand discovers that the Office of Fair Trading have also
been investigating Holidays R Us’ trading terms and conditions
for several months.
Advise Ferdinand.

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 TUTORIAL 6
PERFORMANCE, BREACH AND FRUSTRATION

Reading:
McKendrick: Cases and Materials Chs. 21 & 22
Important Cases:
Taylor v Caldwell (1863) 3 B& S 826
Krell v Henry [1903] 2 KB 184
Herne Bay Steamboat Co v Hutton [1903] 2 KB 683
Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] A.C.
524
J. Lauritzen A.S. v Wijsmuller B.V. (The Super Servant No. 2)
[1990] 1 Lloyd’s Rep 1
Fibrosa Spola Akcyjna v Fairburn Lawson Combe Barbour
[1943] AC 32
Gamerco SA v ICM[1995] 1 WLR 1226
Cutter v Powell (1795) 6 TR 320
Sumpter v Hedges [1898] 1 QB 673
Hoenig v Isaacs [1952] 2 All ER 176
Bolton v Mahadeva [1972] 1 WLR 1009
Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26
Photo Productions v Securicor Ltd [1980] AC 827 (read Lord
Diplock's speech)
White and Carter (Councils) v McGregor [1962] AC 413

*You must bring the Law Reform (Frustrated Contracts)

Act 1943 with you to the tutorial*

Problem:
Gladys is about to celebrate her 50th birthday. She is very
excited and decides to hold a party at the local village hall and
invite all her friends. The village hall costs £500 for the
evening, payable 1 day before the event. She also decides
she should have authentic food from Northern Pakistan. She
went to Northern Pakistan on a trekking holiday when she was
21 and has never forgotten the wonderful food. She decides
that the only way to truly re-create the flavour is to import the
food direct from Northern Pakistan. She contacts
AuthenticFlavours.com, a specialist in unusual food supplies,
and they agree to provide all the food direct from Northern
Pakistan for £400. She pays £150 as a deposit with the
balance due on the night of the party. Gladys also decides she
wants a live jazz band to supply the music for the event. She
employs Norman & his Jazzy Players to entertain her guests
at the party. The band costs £600 which will be paid after the
event. Norman & his Jazzy Players hire a rehearsal room in
which to practice for the concert. The rehearsal room costs
£50.
Five days before the event when AuthenticFlavours.com are
expecting the food to be shipped from Northern Pakistan,
there are tribal insurgence problems in the region so the

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Pakistani government invade the area. The UK government
declare all contracts with Northern Pakistani companies illegal
for the foreseeable future. Also five days before the party,
Norman (the lead singer of the band) gets very drunk at the
rehearsal and falls off the stage. He is knocked out and ends
up in hospital for three weeks. The rest of the band suggest
they could play at the concert, but Gladys was really hoping
Norman would be there, as she has already told her friends
that Norman himself will be singing at the concert. Gladys is
devastated as a result of all the problems and cancels the
party. AuthenticFlavours.com, Norman & his Jazzy Players
and the village hall are all insisting Gladys pay them the sums
due under the contracts.
Advise Gladys.

In your own time, think how to construct an answer to the

following question:
Lady Puritan commissions Pecassi, a celebrated and popular
artist, to paint a portrait of her husband Sir Sleeper for £9000.
She pays £500 deposit to allow Pecassi to purchase basic
materials to begin his work. Pecassi buys paint, brushes and
an easel so he can start work: he spends £350. After the
painting is begun, Lady Puritan finds out Sir Sleeper has been
having an affair with his secretary, Maureen. Lady Puritan
declares that she will have nothing more to do with him and
instructs Pecassi to stop work immediately. But Pecassi,
encouraged by Sir Sleeper who continues to come for sittings,
finishes the picture and delivers it to Lady Puritan together
with a bill for £8500. She is furious.
Advise Lady Puritan. Would your answer differ is Lady Puritan
had not paid a deposit for the painting

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 TUTORIAL 7
REMEDIES FOR BREACH OF CONTRACT

Reading;
McKendrick: Chs 23 & 24
Important cases
Alfred McAlpine Construction Ltd v Panatown Ltd (No 1)
[2001] 1 AC 518
Ruxley Electronics and Construction Ltd v Forsyth [1996] AC
344
Farley v Skinner [2001] 3 WLR 899
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co
Ltd [1915] AC 79
Co-operative Insurance Society v Argyll Stores (Holdings) Ltd
[1997] 3All ER 297 (noted by Phang (1998) 61 MLR 421)

Problem:
Andy, a young aristocrat, wanted to buy a country house in
Rutland to use as a weekend home. He instructed Bob to
survey it, saying to him that he was particularly concerned
about noise, as one of the purposes of buying the house was
to enable him to relax with his friends at weekends. Bob
agreed to survey the house for £800 and to investigate the
question of noise. In his report he stated that the property was
in good condition and there was no problem with noise. Andy
therefore bought the house for £300,000, its full market value.
Prior to moving in, Andy also contracted with Clear Blue & Co.
who agreed to build a swimming pool at the back of the house
that was to be 15m long and 8m wide for £10,000. Andy
specifically stated that he wanted the pool to be deep enough
to enable him to practise his diving.
On moving in to the property Andy quickly discovered that
planes from a nearby military base made frequent low level
flights over his house. He also discovered that the swimming
pool was only 13m long and was not deep enough for diving.
The cost of lengthening and deepening the swimming pool
would be £8,000. Andy used the house at weekends for six
months in which time the aircraft noise substantially impaired
his enjoyment of the property. In that time the value of the
house dropped to £280,000, the fall in price being due solely
to the decline of property values in the area.
Andy now seeks damages for breach of contract by Bob, for:
• The financial loss caused by the fall in value of the
house
• The disappointment, anxiety and distress caused by the
noise from the planes
• He also seeks damages for breach of contract by Clear
Blue & Co for the cost of lengthening and deepening
the swimming pool.

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Discuss.

Dr Fiona Smith
Dr Prince Saprai
September 2010

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