G279 ctl aug 21 answer booklet final
ANSWER BOOKLET
GDL: CONTRACT LAW AUGUST 21 EXAM
| CANDIDATE NUMBER | (Please add candidate number
eg C 12345678 – also add to top right corner of Answer Booklet) |
| WORD COUNT | (Please add word count for the three answers eg 5,200) |
| EXAM DATE | 12 AUGUST 2021 |
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CONTRACT LAW
INSTRUCTIONS TO CANDIDATES
Where questions are sub-divided, candidates should not expect the sub-divisions necessarily to be of equal weight.
You must answer THREE questions out of SIX.
You may refer to your GDL Statutory Extracts.
There is a maximum word limit of 6,000. Words in excess of this limit will not be marked.
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QUESTION 1
Jenny saw an advertisement for an auction of antique clocks and decided to attend. She was especially interested in Lot 24 comprising a Rolling Moon Grandfather Clock in a figured mahogany case with a brass arch dial (“Lot 24”). (A grandfather clock is a tall free-standing wooden clock with chimes.) To help fund her proposed purchase she decided to sell her granddaughter clock (which is like a grandfather clock, but smaller).
She put a notice on the advertising board at her local supermarket – See Document A.
A week later, having had no response to the advert, she wrote to a friend, Kate, who in the past had expressed some interest in buying the granddaughter clock. Jenny told her that she was prepared to sell the clock to her for £600. She added that if Kate wanted to buy the clock she must let Jenny know as soon as possible.
On the same day Kate received the letter, she posted a reply saying, “I’ll buy the clock for £600. As you have an estate car with plenty of boot space, would you be able to deliver it to me? Otherwise I will need to borrow my Dad’s van.” Kate’s letter was lost in the post and Jenny did not receive it.
The next morning, a mutual friend, Stuart, told Jenny that he had seen Kate and that she had said she was buying Jenny’s granddaughter clock. Jenny immediately telephoned Kate and left a voicemail message saying that she had just accepted an offer from Bharat of £630 for the clock and that it was no longer for sale.
That afternoon Jenny attended the auction and made a bid of £1,000 for Lot 24. There was no higher bid, but the auctioneer refused to sell to Jenny (as he knew Lot 24 was worth about £4,000). Jenny was disappointed as the auctioneer’s catalogue had stated that Lots 20-30 were to be sold without reserve.
The following day when Damien was shopping at the supermarket, he saw Jenny’s advert. He telephoned Jenny and told her that he wanted to buy the granddaughter clock for £650. Jenny told Damien that the clock was no longer for sale. On the same day, Kate telephoned and said she had been on holiday for a few days and had only just heard Jenny’s message. She said as far as she was concerned they had a deal and wanted to know when Jenny would be delivering the clock, or if she needed to collect it.
Both Kate and Damien are claiming they have a contract with Jenny for the clock.
Advise Jenny explaining her legal position in relation to Damien and Kate and whether she has any claim in respect of Lot 24.
DOCUMENT A
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FOR SALE Westminster and Whittington chime granddaughter clock in veneered oak case. Circa 1930 Height 142cms
Price: £650 Contact Jenny on 07710 876401
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QUESTION 2
In June last year Amelia purchased a retirement home with the intention of running it as her business. To raise the money to buy it Amelia had borrowed £250,000 from Finance plc. Amelia agreed to repay the loan over 25 years at £2,500 (capital and interest) per month and Finance plc took a mortgage over the retirement home as security. It was a term of the loan that if Amelia defaulted on the loan, Finance plc could repossess the retirement home with a view to selling it to recover monies owed to Finance plc.
Soon after Amelia had bought the retirement home, she decided to have a wall in the restaurant painted with a floral mural and commissioned Humera to do the work for £500, payable on completion. However, when Humera was part way through the work she realised that she had underestimated the time and cost and asked Amelia if she would be prepared to pay her an extra £200, to get the mural finished. Mindful of the fact that it would be extremely difficult to find another painter prepared to finish off the mural, Amelia agreed. Humera went on to complete the mural and Amelia paid her £500, but refused to pay her any more.
After a while it became apparent that Amelia had overestimated demand for places at the retirement home and within six months of purchasing it found that she could not meet the repayments due to Finance plc. She was £5,000 in arrears and Finance plc arranged a meeting with Amelia to discuss matters in January.
At that meeting, Finance plc voiced concerns about Amelia’s borrowing, but assured Amelia that they would not repossess until they had received a report on Amelia’s business from their accountants. In the meantime, it was agreed that Amelia would pay just the interest part of all future mortgage payments together with £500 per month towards the arrears.
On 3 January Amelia paid Finance plc one month’s interest for January plus £500 towards the arrears.
On 2 February, without receiving a report from their accountants, Finance plc sought possession of the retirement home.
Also, Humera is demanding that Amelia pay her the extra £200.
Advise Amelia, explaining her legal position in relation to Finance plc and Humera.
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QUESTION 3
Megan runs a small but successful garden centre, Gresford Nursery. She employs three gardeners to help her with the plants, and two sales staff in her shop. Ripton Horticultural Supplies plc (“RHS”) is a supplier of insecticidal chemicals to the horticultural industry.
At the end of February, Megan planted seeds for two varieties of bedding plants: petunias and geraniums. She rang RHS and asked for a pesticide which would be suitable for spraying onto the seedlings of these plants to prevent infestations with caterpillars and other pests.
Megan explained that she would be planting out the petunia seedlings in mid-March, so she would need the first batch of pesticide by 15 March at the latest, when they had germinated properly. She said that she would not need the second batch, for the geraniums, until mid-April as geraniums take longer to germinate and grow.
Megan asked RHS to send her a quotation for a suitable product. RHS sent a quotation for their product known as “EZY-C2”. A copy of the quotation is attached as Document B. On receipt of it, Megan rang RHS and said she wanted to go ahead. She explained that she was keen to start planting quickly to get her plants into the nursery in time for Easter, which is one of her busiest times of the year. She did not bother to read the terms and conditions on the back of the quotation, which included the clauses set out in Document C. These are standard terms adopted by the Horticultural Suppliers and Growers Federation (“HSGF”).
Unfortunately, on 15 March, RHS told Megan that delivery of the first batch of EZY-C2 would be delayed by two weeks. Megan tried several suppliers, but was quite unable to locate any alternative sources of EZY-C2, or other suitable pesticides. By 20 March, all the petunia seedlings had been attacked by pests and destroyed.
The second batch of EZY-C2 arrived on time. Megan sprayed it in accordance with the instructions. However, two weeks later, the young geraniums started turning brown. Within a week, they had all died. EZY-C2, it turns out, is toxic to geraniums.
Megan was able to replant the petunias in time for Easter, but it has cost her £1,000 to buy and plant the new seeds, and another £2,000 for compost, heat and lighting to encourage rapid germination.
It was too late to replant the geraniums, and Megan has lost £10,000 profit from prospective sales in the garden centre.
Megan has asked RHS to pay for her losses, but they have refused.
Advise Megan, explaining her legal position in relation to RHS.
DOCUMENT B
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DOCUMENT C
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QUESTION 4
“The object of the doctrine [of frustration] was to give effect to the demands of justice, to achieve a just and reasonable result, to do what is reasonable and fair, as an expedient to escape from enforcement of a contract in its literal terms after a significant change in circumstances.”
Per Bingham LJ in J.Lauritzen AS v Wijsmuller BV, The Super Servant Two [1990]1 Lloyd’s Rep 1(CA)
Explain and discuss the above statement with reference to decided cases.
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QUESTION 5
Tia bought some premises to open a new fast-food outlet.
She entered a contract with Custom Limited (“Custom”), who agreed to fit out the front of the outlet for £10,000. The first stage of the contract was to put in fixtures and fittings, for a fee of £4,000. The second stage was to replace the doors and windows, for a fee of £6,000. Tia asked for an extra-wide door, explaining that many of her customers had young families, so needed to be able to get pushchairs through the door easily.
To find a kitchen fitter, she rang the Find-a-fitter Agency. They said that they had a fitter, Gemma, on their books, and that they were authorised to enter into kitchen fitting contracts for her. The Find-a-fitter Agency said they would, on Gemma’s behalf, agree a fee of £20,000 for Gemma to fit out the kitchens.
Finally, Tia engaged Eric to pick up litter outside the outlet, on a two-year contract at £200 per month.
Custom put the fixtures and fittings in. It also fitted the doors and windows, but due to an oversight, they only fitted a normal sized door. Custom has refused to replace it, because fitting a wide door would involve replacing the windows with smaller windows, and would cost £3,000. In any event, Custom says the door is still perfectly useable as pushchairs can get through it. Tia maintains that her customers with families will have difficulty squeezing pushchairs through the door, and may be put off visiting as a result. She insists that it be replaced, and she has refused to pay Custom anything at all until it is.
Gemma refused to fit out the kitchens. She says she told the Find-a-fitter Agency that she only does bedrooms. Tia is insisting that Gemma is contracted to do the work.
Shortly before the outlet opened, Eric rang Tia and asked if both he and Tia could treat themselves as released from the contract. Tia agreed, thinking that she would easily find another person to pick up litter. However, she has not been able to find anyone else and now wants to hold Eric to the contract.
Advise Tia, explaining her legal position in relation to each of Custom, Gemma and Eric.
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QUESTION 6
Alan, 60, is a ticket dealer. At a cost of £50,000, he managed to obtain exclusive ticketing rights for the World Under-18’s Jei Bando Martial Arts Championships (“the Championships”), to be held in Middlesbrough. To raise the money, he visited the Bank of Saltburn PLC (“the Bank”), to borrow £40,000. The Bank was concerned about lending to Alan and asked if he knew of anyone who would act as a surety for him.
Alan went away and spoke to his girlfriend, Katie, 18, a shop assistant. Katie had recently moved in with Alan, and had, at Alan’s request, started paying her salary into Alan’s bank account. Katie asked what the guarantee would involve, and Alan explained that it would give her the chance to share in the profits of the Championships. Alan took Katie to the Bank, where she had a meeting with the Bank manager, who explained the detailed technicalities of subrogation, indemnity and contribution to her. Katie, embarrassed by her ignorance, pretended to understand, and signed the guarantee.
Alan set up a website to promote the Championships, which advertised a premium rate phone line through which tickets could be purchased. Alan received a number of calls for tickets, including a call from Harry.
Harry asked if there were any tickets left, and how much they were. Alan replied, “You’d better snap them up, pal, I’ve only got five tickets left on my desk and they’ll be sold in the next ten minutes. They’re £50 each.” Harry bought all five. Alan did not tell Harry that the rest of the tickets for the event were in his car.
The event was a major disappointment and Alan has received a number of formal complaints, including one from Harry who was very surprised to see so many unsold seats.
As a result of all the problems Alan has had to cancel further events and can no longer afford to repay the loan from the Bank. The Bank has demanded payment under Katie’s guarantee.
Advise Alan, explaining his legal position in relation to Harry and advise Katie, explaining her legal position in relation to the Bank.
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