FE1 CONTRACT LAW
NIGHT BEFORE NOTES
OCTOBER 2016
General Points
Your contract paper is often one of the most formalised structures of any of the FE1 exams. You will have
questions 1-4 being broad based problem questions, often spanning several topics (or at least different areas
in two distinct contractual scenarios portrayed in different paragraphs of the question) and then questions 5-8
being essay-style questions. The problem questions tend to be more predictable than the essay questions and,
in the main, easier to ratchet up the points. The essays tend to be less predictable and often focus on very
specific aspects (sometimes niche) areas of contract law. Having said that, there will generally be some
straightforward questions and the examiner is often quite fair in asking one essay question as an ‘answer a or
b’ option – effectively giving you greater choice. However, watch out carefully for the other questions where
you must answer ‘a’ and ‘b’!
Your study cannot be too limited, as practically the scoping of the paper means that all areas are examinable
or could be considered under part of a problem question or in an essay question – but there are certain areas
that are of far more regular appearance and focus than others. For example, I would always recommend study
of Offer, Acceptance, Consideration/Estoppel, Contractual Terms, Exclusion Clauses, Consumer Contracts,
Mistake, Misrepresentation, Discharge and Damages – but whilst important, would also never suggest that is
all that is needed!
The recent March paper was relatively straightforward. There were the usual contenders – consideration
(executory promises), consumer contracts (in various contexts), exclusion clauses and damages all featured in
the problem questions, while contractual terms (warranties/conditions/innominate terms), offers (as distinct
from invitations to treat), mistake (unilateral mistake as to identity) and estoppel (vis-à-vis Pinnel’s case)
featured in the essay questions. However, less prevalent topics also appeared – undue influence and statutory
illegality in the problem questions, and intention to create legal relations and formal evidentiary requirements
in the essay questions. While I would not expect identical questions to reappear in October, you should not
work on an assumption that they will not reappear in some format. on this October paper – e.g. Offer /
Mistake / Damages all were the focus of three problem questions, but all still liable to appear again in April.
With this in mind and a good, case-law supported answer always being the key for contract law analysis,
please see below a few abbreviated notes on core areas for attention and review:
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
Offer and Acceptance
Distinction between Offer and Invitation to Treat (ITT)
o Offer must be “clear and unambiguous”
o Offer is a clear and unambiguous statement of the terms upon which the offeror is willing to
contract, should the person to whom the offer is directed decide to accept
o Clifton v Palumbo (“prepared to offer”: not sufficiently definite/detailed to be an offer)
o Gibson v Manchester City Council (“may be prepared to sell”: not sufficiently definite to be an
offer)
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
Advertisements:
Grainger & Sons v Gough (Wine price list: advertisements generally an ITT)
Partridge v Crittendon (Advert re protected birds: advertisements generally an ITT)
CA Norgren Co v Technomarketing (Price list of copyrighted item: an ITT)
Leonard v Pepsi Co (Points for Harrier jet: humorous/no reasonable person would think it an
offer)
Carlill v Carbolic Smokeball Company (Lodgement of £1000: offer serious/possibility of
unilateral offer)
Kennedy v London Express newspapers (Registrants entitled to insurance: conceded that it
was a unilateral offer)
Wilson v Belfast Corporation (Unauthorised advert that Council to pay ½ salary to enlistees:
not an offer)
Billings v Arnott (Advert to pay ½ salary to enlistees: unilateral offer)
Lefkowitz v Great Minneapolis Surplus Store (Discount sale “first come, first served”: clear,
definite, explicit unilateral offer)
Display of Goods:
Fisher v Bell (Display of flick knife: display generally an ITT)
Minister for Industry & Commerce v Pim (Display of coat w/o credit terms being set out:
display generally an ITT)
Pharmaceutical Society of Great Britain v Boots Cash Chemist (Display of goods an ITT/offer
to purchase when brought to cashier)
Auctions:
Harris v Nickerson (Advert re auctions generally an ITT)
Warlow v Harrison (Advert re sale by auction an ITT / advert re T&Cs of auction, i.e. “without
reserve,” a unilateral offer)
Tully v Irish Land Commission (Irish courts: advert re sale by auction an ITT / advert re T&Cs
of auction, i.e. “without reserve,” a unilateral offer)
Barry v Davies (Cannot reject highest bidder / bidder entitled to recover damages from
auctioneer)
Tenders:
Similar approach vis-à-vis tenders
Spencer v Harding (Advert re tenders generally an ITT / no obligation to sell to highest bidder
w/o specific undertaking)
Harvela Investments v Royal Trust Co of Canada (undertaking to accept highest bidder /
cannot accept referential bid)
Howberry Lane v Telecom Eireann (privilege clause / may accept referential bid / no
obligation to accept highest bidder)
Smart Telecom v RTE (Referential bid only valid where expressly permitted)
MJB Enterprises v Defence Construction (Canada: privilege clause / no obligation to accept
lowest bid / implied condition that only compliant bids accepted)
Quotations, Requests for proposals/information
Harvey v Facey (“lowest cash price”: quotation generally an ITT)
Boyers v Duke (“lowest quotation”: quotation generally an ITT)
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o

Terminating an Offer
o Revoking an offer:
o Paye v Cave (revoke any time before acceptance / revocation must be communicated)
o Routledge v Grant (offer open for 6 weeks: revoke any time before acceptance where no
consideration)
o Walker v Glass (offer open until certain date, deposit required: revoke any time before
deposit paid where no consideration)
o Dickinson v Dodds (Offer open until certain date: entitled to revoke before acceptance where
no consideration / revocation must be communicated / third party communication sufficient)
o
o
o
o
o
o
o
o
o
o
o

Dooley v Egan (quotation for immediate acceptance only: a unilateral offer)
Revoking a unilateral offer:
Daulia v Four Millbank Nominees (obiter: revocation not possible once performance
commences)
Errington v Errington (mortgage on house: revocation not possible once performance
commences)
The Brimnes / Byrne –v- Van Tienhoven (revocation by post only effective once received)
Rejection of an offer / counter offer:
Hyde v Wrench (offer to sell for £1000, counteroffer of £950: counter offer amounts to a
rejection)
Stevenson, Jacques and Co v McLean (mere enquiry: not a counter offer / did not reject
original offer)
o
o
o
Rejection of an offer / delay or lapse of time:
Parkgrange Investments v Shandon Park (offer may lapse if not accepted by time limit)
Commane v Walsh (sale of land dependent on earlier transaction)
Ramsgate Victoria Hotel v Montefiore (offer to buy shares: not accepted within reasonable
time)
Dooley v Egan (“immediate acceptance only”)
Lynch v Governors of St Vincent’s Hospital (offer of new employment contract)
Earn v Kohut (Offer to settle claim open 2 ½ years later)
o
o
Death of an offeror/offeree:
See Re Whelan deceased; Coulthart v Clementson; Re Irvine; Reynolds v Atherton
o
o
Failure of a precondition:
See Financings Ltd v Stimson
Acceptance
o Must be a final and unequivocal expression of agreement to terms of an offer. Must not vary
terms, or will amount to a counter-offer.
o
o
Intention to accept:
See Brennan v Lockyer; Parkgrange Investments v Shandon Park Mills
o
o
Counter offers:
Tansey v College of Occupational Therapists (“communication … which contains conditions
not previously agreed”)
Swan v Miller (Offer to sell for £4750, offer to buy for £4450: counter offer)
Tinn v Hoffman (Offer to sell 1200 tonnes, order for 800 tonnes: counter offer)
Hyde v Wrench (effect to render original offer incapable of acceptance)
Wheeler v Jeffrey (Letter indicating commencement date: counter offer)
Covington Marine Corp v Xiamen Shipbuilding (objective test)
o
o
o
o
o
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o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
Battle of the forms:
Butler Machine Tool Co v Ex-Cell-O Corp (Exchange of standard T&Cs: buyer’s order was offer
/ return of buyer’s slip acceptance / analyse each communication)
Chichester Joinery v John Mowlam (even where standard forms do not correspond,
acceptance may be inferred from conduct)
British Road Services v Crutchley (Plaintiff accepted noted stamped by Defendant:
Defendant’s terms)
Buchanan v Brook Walker (Defendant entitled to presume that Plaintiff had read the conract)
G Percy Trentham v Archital Luxfer (Defendant accepted contract by conduct)
Implied acceptance and acceptance through conduct:
Brogden –v- Metropolitan Railway Co. (Tacit communication of assent by acting in
accordance with agreement)
Anglia Television v Cayton (Need (i) clear and unambiguous offer; (ii) conduct by way of
acceptance applicable exclusively to offer)
Western Electric Ltd v Welsh Development Agency (acceptance by going into occupation)
Silence not acceptance:
Felthouse v Bindley (“if I hear no more”: silence not acceptance)
Russell & Baird v Hoban (“if sale note be retained beyond 3 days”: lack of response not
acceptance)
Re Selectmove (parties may agree that silence is acceptance)
Rust v Abbey Life Assurance (past dealings give rise to legitimate expectation that silence will
suffice)
Western Electric Ltd v Welsh Development Agency (Implied contract for services / service
cannot be returned)
o
o
o
o
Communication of acceptance:
Embourg v Tyler (acceptance must be communicated to be effective)
Entores v Miles Far East (acceptance ineffective until it is received)
Carlill v Carbolic Smoke Ball (for unilateral offer acceptance through performance)
o
o
Means of communication prescribed by offeror:
Tinn v Hoffman (“reply by return of post”: equally speedy method sufficient unless offeror
precluded other methods
Staunton v Minister for Health (verbal acceptance sufficient notwithstanding that offeror
specified signature of contract)
o
o
o
o
o
o
o
o
o
o
o
o
Acceptance by telephone, telex etc:
Where the method of communication is instantaneous, the receipt rule applies.
Entores v Miles Far East (acceptance ineffective until it is received)
Parkgrange Investments v Shandon Park Mills (rule adopted in Ireland)
Brinkibon v Stahag Stahl and Stahlwarenhandelgesellschaft (cases must be resolved by
reference to intentions of the parties, sound business practice and judgment as to where the
risks lie)
Tenax Steamship v The Brimnes (Telex within office hours, communicated when received by
machine, need not be read or understood)
Mondial Shipping & Chartering v Astarte Shipping (Telex outside office hours, not
communicated until the open of business the next working day)
Acceptance by Post
The postal rule applies for letters of acceptance posted, effective when sent.
Adams v Lindsell (acceptance effective when letter posted)
Household Fire Insurance v Grant (contract complete upon posting acceptance)
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o
o
o
o
o
o
o

Kelly v Cruise Catering (exceptions where rule might cause injustice or clear intention to
exclude it)
Exceptions: Holwell Securities v Hughes, Nunin Holdings v Tullamrine Estates Property
(prescribed method of acceptance – receipt required); Entores Ltd v Miles Far East
Corporation (instantaneous communications); Holwell Securities v Hughes (manifest
absurdity); Apicella v Scala (public policy)
Acceptance by email and the Electronic Commerce Act 2000
Debate as to whether postal rule or receipt rule applies to email
See Thomas v BPE Solicitors; Chwee Kin Keong v Digilandmall.com; Greenclose v National
Westminster Bank
Brinkibon (consider intentions of the parties, sound business practice, where the risk lies);
Tenax Steamship Co v The Brimines (during work hours); Mondial Shipping (inside work
hours)
Electronic Commerce Act and Regulations (only apply to business to business, and business to
consumer contracts)
Consideration
Something of tangible value that is given or forborne in exchange for a promise –
o Thomas –v- Thomas (lease for £1 per year);
o Chappell v Nestle (wrappers were good consideration).

Need not be adequate, but must be sufficient
o Must be of a type recognised by law - O’Neill v Murphy; Pando v Fernandez (prayers not
sufficient consideration)
o Performance of a duty imposed by the general law not sufficient unless something over and
above that public duty – Collins v Godefroy; England v Davidson; Glasbrook Bros v-Glamorgan
County Council;, Harris v Sheffield United , McKerring v Minister for Agriculture
o Performance of existing contractual duty not sufficient – Stilk v Myrick , North Ocean
Shipping v Hyundai; Hartley v Ponsonby; Williams v Williams (outlier); McHugh v Kildare
County Council
o Performing a duty owed to someone other than the promisor may be sufficient – Shadwell v
Shadwell; The Eurymedon
o Part payment of a debt is insufficient – The Rule in Pinnel’s Case , Foakes v Beer; Barge Inn v
Quinn. Confusion / criticism / unique nature thrown up by Williams –v –Roffey Bros &
Nicholls (Contractors) Ltd; Re Selectmove.
o Forebearance may be sufficient consideration – Hamer v Sidway; O’Keeffe –v- Ryanair
Holdings
o Must not be “past” consideration - Roscorla –v- Thomas; Re McArdle; Reaffirmed in
Provincial Bank of Ireland v O’Donnell and Law Society v O’Malley. Exceptions – if implicit at
the time that it was to be paid for, then may be sufficient (Lampleigh –v- Braithwait;
Bradford –v- Roulston; Pao On –v- Lau Yiu Long)
o Consideration must move from promisee (not third party) – Tweddle –v- Atkinson ,
McCoubray –v- Thompson; Dunlop Pneumatic Tyre v Selfridge. Exception where promise
made to two or more people – McEvoy v Belfast Banking Corporation

Estoppel – may be possible to enforce in absence of consideration
o Equitable estoppel may step in where there is insufficient consideration (e.g. past
consideration)
o Main (i) unambiguous representation as to future intention; (ii) reliance by promisee; and (iii)
some element of detriment/unconscionability if promisor goes back on promise
o Estoppel may only be used as defence (‘as a shield, not as a sword’) - Combe –v- Combe
o Principles established and illustrated in leading case law: Hughes –v- Metropolitan Railway;
Tool Metal Manufacturing –v- Tungsten Electric Co. Ltd; Central London Property Limited –vHigh Trees – more recently in Kenny –v- Kelly , Revenue Commissioners –v- Moroney
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o
o


Only applies to voluntary promises (i.e. not under duress) – D&C Builders v Rees;
Does not generally apply to cases governed by Pinnel’s case: D&C Builders v Rees; Zurich Bank
v McConnon
Intention to Create Legal Relations
Final core requirement – would ordinary reasonable man have believed there was an intention to
create legal relations – Edmonds –v- Lawson
Two main categories and presumptions – family, domestic or social (no intention) & commercial
(intention exists). Both rebuttable on their facts

Family, Domestic or Social
o Presumption that no intention between husband and wife ( Balfour –v- Balfour) unless
separating (Courtney –v- Courtney; Merritt v Merritt)
o Presumption that no intention in relation to other family relationships e.g. parent and child
(Rogers –v- Smith; Jones –v- Padavatton); uncle and nephew (Mackey –v- Jones);
o Irish courts may have limited presumption to spouses and parent/child relationships (Leahy –
v- Rawson)
o Possible to rebut presumption - evidence that legal relations intended, degree of closeness;
extent of reliance etc.

Commercial Arrangements
o Presumption that intention is present, unless rebutted by clear evidence: Esso Petroleum –vCommissioner for Customs & Excise , Cadbury –v- Kerry Co-Op & Dairy Disposal Co. Ltd
o Honour clause may exclude presumption – Rose & Frank Co. v Crompton
o Agreements to negotiate attract presumption but lack certainty – Pagnan v Feed Products;
Walford v Miles; Cadbury v Kerry Co-op & Dairy Disposal. Lock-out agreements may be a way
around it. Different approach evident in other jurisdictions (Coal Cliff Colleries v Sijehama;
Con Killergis v Calshonie etc.)
o Letters of comfort – effect depends on wording of letter as to whether intention exists:
Kleinwort Benson –v- Malaysia Mining Corporation; Banque Brussels Lambert v Australian
National Industries;
o Letters of intent indicating that there is an intention to enter contractual relations in due
course
o Subject to contract clauses (current arrangements conditional on final contract being
concluded) – Thompson v The King; Mulhall v Haren
o Lottery syndicates – Simpkins –v- Pays / Religious Arrangements – Zevevic –v- Russian
Orthodox Christ the Saviour Cathedral / Agreements with Government / Educational
Agreements – Edmonds v Lawson.

Collective Agreements
o English courts take approach that there is no intention to create legal relations (Ford –vA.E.U.W.)
o Irish courts lean towards view that there is intention (Ardmore Studios –v- Lynch; Goulding
Chemicals v Bolger; O’Rourke –v- Talbot).
o The uncertainty of terms may cause difficulty in enforcement.
o Note also the Industrial Relations Act 1946.

Formal Requirements & Capacity & Privity
S.2, Statute of Frauds (Ireland) Act 1695
o Certain contracts must be evidenced in writing, otherwise they are unenforceable (not void)
o Main examples include contracts for sale of land and contracts for sale of goods over €12
o Sale of Land - Guardian Builders –v- Sleecon (indirect connections with land need not be
evidenced in writing)
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o
o
o
o
o
Contracts for sale of goods – see s.4 Sale of Goods Act 1893: contract enforceable where
there is a memo; part acceptance of goods; buyer has given something in earnest or part
payment.
Memo may be contract, letters, emails, cheques etc. (Tradax v Irish Grain Board; Maloney v
O’Connor; Doherty v Gallagher);
Memo must contain 3 P’s (parties, property, price) and other term the parties consider
essential (Godley v Power) - distinction between inadequacy of memo and uncertainty of
terms (Supermacs Ireland and McDonagh v Katesan and Sweeney);
Memo must be signed by party to be charged – headed note paper may be sufficient (Casey
–v- Irish Intercontinental Bank)
Joinder of documents possible - Kelly –v- Ross and Ross ; Maloney v O’Connor

Subject to Contract
o May invalidate a document constituting a valid memorandum
o Kelly –v- Park Hall School , Irish Intercontinental Bank –v- Casey , Mulhall –v- Haren , Boyle –
v- Lee (most recent SC decision, reaffirming the orthodox view), Jodifern –v- Fitzgerald

Part Performance
o Significant exception – equity will not allow a party to rely on Statute where to do so would
allow the party to gain unfair advantage Lowry –v- Reid;
o Mackie –v- Wilde (concluded contract; showed intention to perform; performance induced
or acquiesced in; unconscionable to allow reliance on Statute); Steadman –v –Steadman;
Hope v Lord Cloncurry;
o A number of different acts may constitute part performance - WP McCarter v Roughan;
Rawlinson v Ames; Kingswood Estate –v- Anderson
o Statute may not be used as an engine of fraud (Doherty v Gallagher) and waiver of terms
(Healy v Healy)

Capacity
o Minors – Contracts that are binding i.e. contracts for necessaries and beneficial services
o Contracts for necessary goods: Ryder v Wombwell; Chapple –v- Cooper , Skrine –v- Gordon,
Nash –v- Inman; Prokopetz v Richardsons Marina; First Charter v Musclow; Soon v Wilson;
o Contracts or necessary services: Chapple v Cooper; Helps v Clayton; Fawcett v Smethurst;
o Contracts for beneficial services: Doyle –v- White City Stadium; De Francesco –v- Barnum ,
Shears v Mendeloff; Chaplin v Leslie Frewen; Proform Sports Management v Proactive Sports
Management;

Privity
o Common law rule that a person who is not a party to a contract cannot enforce the terms of
htat contract, nor can those terms be enforced against that person.
o Tweddle –v- Atkinson , McCoubray –v- Thompson , Dunlop v Selfridge, Murphy –v- Bower ,
Mackey –v- Jones
o Exceptions to principle – Agency (Midlands Silicones v Scruttons; The Eurymedon; Hearn v
Matchroom Boxing v Collins); Contractual trusts(Tomlinson –v- Gill , Drimmie –v- Davies – an
intention to create a trust seems to be necessary per Cadbury Ireland –v- Kerry Co-Op
Creameries Ltd); Tort (Wall v Hegarty; Ward v McMaster; Woodar v Wimpey; Panatown v
Alfred McAlpine Construction); Covenants running with the land (Tulk v Moxhay; London Co
Co v Allen); Collateral contracts (Shanklin Pier v Detel Products)
o Statutory intervention (Road Traffic Act 1961; Package Holidays Act 1995; Mararied
Women’s Status Act 1957 and Jackson v Horizon Holidays)

Contractual Terms
Express Terms
o Sales puff (no legal effect), mere representations (no contractual effect), warranties
(contractual term) - objective test to determine (Oscar Chess v Williams)
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o
Key factors – what stage of the transaction (Routledge v McKay; Schawel v Reade); is it
included in written contract (Routledge v McKay); special knowledge or skill of
representor (Oscar Chess v Williams; Dick Bentley v Harold Smith Motors; Hummingbird
Motors v Hobbs; Bank of Ireland v Smith); importance of statement (Carey v Irish
Independent Newspapers); indication that statement could be relied on (Schawel v
Reade); specificity of statement;

Parol Evidence Rule –
o Not capable of contradicting, varying, adding or subtracting from the terms of a written
contract (Bank of Australasia –v- Palmer; Macklin & McDonald –v- Gregan).
o Exceptions – agreement part written/part oral (Howden Bros v Ulster Bank; Clayton Love
v B&I); custom and practice (Wilson Strain v Pinkerton; Page v Myer); interpretation
(Chambers v Kelly; Revenue Commissioners v Moroney); oral/collateral contract (City and
Westminster Properties v Mudd); equitable relief sought; consideration (Black v Grealy);
document not a contract (Pym v Campbell); oral promise contradicts standard contract
(Evans v Merzario; BCT Software Solutions v Arnold Laver)

Implied Terms –
o Terms implied in fact (presumed intention of parties) and terms implied in law
o Custom and practice test (notorious; certain; reasonable; clear and convincing evidence;
consistent with express terms) – O’Reilly v Irish Press; O’Connail v Gaelic Echo; Les
Affréteurs Réunis Société Anonyme v Walford
o Business efficacy test (necessary to make contract work) – The Moorcock; Butler v
McAlpine; Karim Aga Khan; Tett v Phoenix Property; Murphy Buckley & Keogh v Pye;
Ward v Spivack
o Officious Bystander Test – Shirlaw v Southern Foundries; Kavanagh v Gilbert; Carna
Foods v Eagle Star Insurance; Tradax Ireland v Irish Grain Board; Horan v O’Reilly; Dakota
Packaging v Wyeth Medica
o Terms implied by the common law (Liverpool City Council v Irwin; Siney v Dublin
Corporation; Hivac v Park Royal Scientific Instruments; Carvill v Irish Industrial Bank; Yam
Seng v ITC; Boots v Hansard); terms implied by Statute (Sale of Goods legislation;
Employment legislation); terms implied by the Constitution (Glover v BLN; Meskell v CIE;
G v An Bord Uchtála)

Relative importance of terms –
o Conditions (damages/repudiation), warranties (damages) and innominate terms
(depends on how serious the breach is;
o Hong Kong Fir Shipping Co. –v- Kawasaki, The Hansa Nord Questions (does contract
expressly/impliedly confer right of termination; does statute/stare decisis point in
direction of condition or warranty; has breach gone to root of contract); Federal
Commerce & Navigation v Molena Alpha; Laird Bros v Dublin Steampacket; Irish
Telephone Rentals v Irish Civil Service Building Society)


Exemption Clauses
Effect of Exemption, Exclusion and Limitation clauses – (Roche v Cork, Blackrock and Passage
Railway; Leonard v Great Northern Railway)
Incorporation
o Was notice given before contract concluded - Olley –v- Marlborough Court Ltd , Sproule
v Triumph Cycle; Thornton –v- Shoe Lane Parking ,
o Was the notice adequate – Parker v SE Railway; Ryan v Great Southern and Western
Railway; Early v Great Southern Railway Company; Interfoto Picture Library v Stilletto
Visual Programmes (particularly onerous term) endorsed by Carroll v An Post National
Lottery; Western Meats v National Ice and Cold Storage (businessman offering a
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o
o

Interpretation
o Narrow construction / interpretation – contra proferentem (Walls, Son & Wells v Pratt
and Haynes; Andrews v Singer); does it extend to tortious liability (Ronan v Midland
Railway Company; Canada Steamship Line v The King; White v Warwick); it will not be
permitted to defeat main purpose of the contract (Glynn v Margetson); limitation
clauses tend to be more acceptable than exclusion/exemption clauses (Ailsa Craig
Fishing v Malvern Fishing; Westcoast Transmission v Cullen Detroit Diesel Allison)
o Axa Sun Life Services Plc v Campbell Martin Ltd, 2015 UK Court of Appeal. Restrictive
approach adopted by the Courts in construing such clauses, particularly in determining
whether they exclude liability for pre-contractual misrepresentations. In business-tobusiness context likely such a clause regarded as ‘fair and reasonable’ – satisfies
requirements under section 46(1) of the Irish Sale of Goods and Supply of Services Act
1980.

Enforceablilty – fundamental breach and consumer legislation
o English position seems to be that an exemption clause may apply to fundamental
breaches (Suisse Atlantique v Rodderdamsche; Harbutts Plasticine v Wayne Tank
Corporation; Photo Production v Securicor Transport)
o Irish position less clear but seems to be that exemption clauses cannot apply to
fundamental breaches (Clayton Love v B&I Steampacket; Western Meats v National Ice
and Cold Storage; Fitzpatrick & Harty v Ballsbridge International Bloodstock Sales;
Regan v The Irish Automobile Club;)
o The Sale of Goods and Supply of Services Act contains important provisions regarding
the validity of exemption clauses in contracts for the sale of goods and supply of
services. The Unfair Terms in Consumer Contracts regulations contains relevant
provisions in relation to consumer contracts.



specialist service but accepting no responsibility); James Elliott Construction v Irish
Asphalt (notice to accounts department to correct payment errors not adequate)
Bound by signature regardless of whether there was notice or notice was adequate –
Duff v Great Northern Railway; L’Estrange –v- Graucob , Tilden Rent-o-Car v
Clendenning (different treatment of signature on standard contract); James Elliott
Construction v Irish Asphalt (signature on delivery docket did not count as docket was
not a contractual document);
Course of dealing may give rise to notice - Spurling –v- Bradshaw; Hollier v Rambler
Motors; James Elliott Construction v Irish Asphalt (despite extensive course of dealing,
only 3 notes set out T&Cs)
Other bars – misrepresentation; collateral undertakings and unconscionable bargains.
Consumer Protection
Sale of Goods Act 1893, Sale of Goods and Supply of Services Act 1980 –
Implied Conditions (and Warranties) in Contracts for Sale of Goods:
o Section 12 – implied condition re title and warranties re free from encumbrances / quiet
possession;
o Section 13 – implied condition re correspondence with description (Moore & Co. v Landauer ,
Fogarty v Dickson; O’Connor v Donnelly; Oscar Chess v Williams (description v quality));
o Section 14 – where goods are sold in the course of business, implied conditions re
merchantable quality (Bernstein –v- Pamson Motors , Rogers –v- Parish , Lutton v Saville
Tractors) and re reasonably fit for purpose, where buyer specifies particular use, (Wallis –vRussell; Stokes and McKiernan v Lixnaw Co-op); buyer must rely on seller’s skill (Draper v
Rubenstein);
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o
Section 15 – implied conditions re correspondence with sample, re reasonable opportunity
of comparing and re goods being free from defect rendering them unmerchantable;

Implied Terms (not specified as conditions or warranties) in Contracts for Supply of Services:
o Section 39 – supplier has necessary skill; due skill, care and diligence will be used; materials
will be sound and reasonably fit for purpose; goods will be of merchantable quality

Exclusion clauses:
o Contracts for the sale of goods (s.55):
o any attempt to exclude s.12 void;
o cannot exclude s.13, s.14, s.15 in consumer contract; exclusion in non-consumer contract
must be fair and reasonable;
o Fair and reasonable test set out in Schedule (George Mitchell (Chesterhall) v Finney Lock
Seeds)
o
o
o
o
o
o
o
Contracts for supply of services (s.40):
Possible in consumer and non-consumer contracts with express agreement of parties; course
of dealing; or common in relevant trade and fact known to both parties;
In a consumer contract exclusion must be fair and reasonable, and consumer must have been
made aware of the exclusion.
Unfair terms in consumer contracts:
Regulations apply to consumer contracts, where they are standard form contracts
Clause will be unfair (and not binding) if there is an absence of good faith and causes a
significant imbalance in the parties’ rights and obligations
Schedule 3 lists examples

Consumer Rights Regulations 2013:
o Replaces previous directives on distance selling and doorstep sales
o Certain information requirements regarding on-premises, off-premises and distance
contracts
o 14 days to cancel contracts for the sale of goods/supply of services where it is an offpremises or distance contract

Contracts of Adhesion Regulations 2011:
o Requirements including requirement service providers give users 1 month’s notice of any
modification and user’s right to withdraw without penalty.

Alternative Dispute Resolution Initiatives:
o Alternative Dispute Resolution (ADR) Regulations 2015: aim to ensure that consumers have
access to ADR for resolving contractual disputes with traders established in the EU;
Competition and Consumer Protection Commission must keep a list of ADR entities
o Online Dispute Resolution (ODR) Regulations: traders established in the EU that sell
goods/services online must provide a link on their websites to the European Commission’s
online dispute resolution platform

Misrepresentation
Key elements:
o Representation – oral, written or conduct (Spice Girls v Aprilia); silence not actionable unless
it is an active misrepresentation (Walters v Morgan; Gil McDowell);
o Representation must be false – includes half truths (Dimmock v Hallett) and changes in
circumstances (With v O’Flanagan; Spice Girls v Aprilia);
o Representation must be a statement of fact – not statement of intention (Wales v Wadham)
or statement of opinion, unless representor has specialist knowledge (Esso Petroleum v
Marsden; Bissett v Wilkinson; Hummingbird Motors v Hobbs); and
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o
o
Representation must induce other party into contract – representee must rely on it (Smith v
Chadwick; Edgington v Fitzmaurice); offer to verify it will not cure it (Redgrave v Hurd);
independent inspection suggests no reliance (Attwood v Small; Intrum Justitia BV v Legal and
Trade Financial Services);
Misrepresentation renders contract voidable

May be classified as fraudulent, innocent or negligent
o Fraudulent – Derry –v- Peek
o Negligent – Hedley Byrne –v- Heller; Thomas Witter v TBP Industries
o Innocent – O’Brien v Kearney

Key remedy is that of rescission – remember always that equitable remedy
o Damages only available for fraudulent or negligent misrepresentation (calculated using tort
measure i.e. put the parties in the position they were in before the tort occurred)
o Equitable remedy of rescission (unpicks contract from the start) – not entitled to it as of right
and court may take equitable factors into account
o Consider whether contract affirmed - Re: Hop and Malt Exchange
o Doctrine in Seddon –v- North Eastern Salt – right to rescission lost once executed (unless
there is fraud) and special provision in Sale of Goods and Supply of Services Act 1980
(William Sindall v Cambridgeshire Co Co)
o Consider where too long a delay in bringing claim – Leaf –v- International Galleries; O’Kelly v
Glenny;
o Consider whether there are any third party rights (White v Garden; s.23(1) of the Sale of
Goods Act);
o Consider whether restitutio in integram remains possible, If not – rescission may be refused
(Vigers v Pike)

Special Position of Contracts made in uberrimae fides and notion of materiality to same
o Rozanes –v –Bowen (person seeking insurance has all relevant facts)
o Chariot Inns Ltd –v- Assicurazioni SPA (objective test of prudent insurer for materiality)
o Aro Road & Land Vehicles –v- Insurance Corporation of Ireland (lower standard for over the
counter contracts; insured should not have to seek out insurer)
o Kelleher –v- Irish Life Assurance Company (form asked for some information, implied that
other information not required)
o Keating –v- New Ireland Assurance (disclosure of facts known to insured)
Test has evolved to that of the ‘reasonable proposer’ from the ‘prudent insurer. Proposer in full
disclosure is just expected to be honest, not omniscient. ‘Basis of contract’ clauses will be
interpreted harshly and strictly in a contra-proferentem manner

Continuing misrepresentations can be acted upon by the ultimate contracting party
o Cramaso LLP v Ogilvie-Grant [2014] UKSC 9, the UK Supreme Court held that a contracting
entity would be entitled to sue for rescission and damages even though the negligent
misrepresentation was not actually made to it in circumstances where the representation is
made and the person is addressed becomes the agent of the person by whom the contract is
concluded.



Mistake
Key elements:
o Must be one of fact and not of law – ignorance of the law is no defence - O’Loghlen vO’Callaghan, Cooper –v- Phibbs (may be mistake as tot private law – distinction abolished in
England in Kleinworth Benson –v- Lincoln City Council)
May be classified as common, mutual or unilateral mistake:
Common Mistake (both parties make same mistake, not at cross purposes):
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o
o
Mistake as to existence of subject matter (res extincta) – Courturier –v- Hastie; Strickland –vTurner; Pritchard v Merchants and Tradesmen’s Mutual Life Assurance; Galloway –vGalloway; s.7, Sale of Goods Act 1893; McRae v Commonwealth Disposals Commission;
Mistake as to underlying assumption – must be fundamental to the contract (Bell –v- Lever
Bros; Solle v Butcher; Leaf –v- International Galleries; John Walker v Amalgamated
Investments; Great Peace Shipping v Tsavliris Salvage (International); Western Potato Co-op v
Durnan; Associated Japanes Bank v Credit du Nord); even if not void at common law, may be
voidable in equity (Solle v Butcher; Cooper v Phibbs; Grist v Bailey; Great Peace Shipping
(move away by English Courts); O’Neill v Ryan (principle still good in Ireland));

Mutual Mistake (parties make different mistake, cross purposes)
o Objective test as to whether contract, in fact, exists – Smith –v- Hughes; Wood –v- Scarth;
Clayton Love v B&I Steampacket; Raffles –v- Wichelhaus; Scriven Bros v Hindley; Mespil –vCapaldi

Unilateral Mistake (one party is aware of other party’s mistake, cross purposes)
o If one party does not know of other party’s mistake, contract is formed (Wood v Scarth)
o If one party is aware of mistake, contract is not formed (Webster –v- Cecil; Hartog –v- Colin
and Shields (standard of reasonable man); Chwee Kin Keong v Digilandmall.com (snapping
up); mistake must relate to terms rather than motives)
o Special case of mistaken identity (possible to take an action for fraudulent misrepresentation
(voidable, title passes) or mistake (void, no title passes)) - Cundy –v- Lindsay ; Phillips –vBrooks Ltd (for mistake, must establish that want to deal with specific person and nobody
else); Ingram –v- Little; Lewis –v- Avery (where person present, presumption of intention to
delay with that person i.e. voidable for misrepresentation); Shogun Finance v Hudson;

Non est factum (contract void) – Bank of Ireland v McManamy; Saunders v Anglia Building Society
(must be mistake as nature of document rather than legal effect; must have taken all reasonable
precautions to ascertain); United Dominions Trust v Western BS Romany; Ted Castle v McCrystal
(radical/fundamental difference with what he thought document was; mistake re document rather
than legal effect; lack of negligence); ACC Bank v Kelly; Danske Bank v Walsh;

Remedies may vary – damages, should be considered – though only if a warranty, or fraudulent /
negligent misrepresentation was made – must also consider rectification
o Declaration that contract is void (common, mutual mistake)
o Rescission (common, mutual, unilateral) – equitable remedy
o Rectification (equitable remedy allowing correction) – Nolan –v-Graves and Hamilton , Irish
Life v Dublin Land Securities; Lucy –v- Laurel Construction; Swainland Builders v Freehold
Propertes (amend document not transaction); Hennigan v Roadstone Wood
o Not necessarily a defence to claim for specific performance

Duress
Duress involves protection against forcing into contract through threats – whether of personal
harm, or other grounds as the doctrine has developed
o Barton –v- Armstrong (threats of violence); Lessee of Blackwood v Gregg (abduction); threat
to invoke legal process (Griffith –v- Griffith; Kaufman v Gerson); economic duress (Stott v
Merit; D&C Builders –v- Rees; North Ocean Shipping v Hyundai Construction; Smelter
Corporation of Ireland v O’Driscoll; The Universe Sentinel (pressure must be
illegitimate/unreasonable; lack of alternative course of action); Atlas Express v Kafco;
Walmsley v Christchurch; ACC Bank v Dillon (consent must be wrongfully obtained); Alec Lobb
(Garages) v Total Oil (coercion by third party).
o Contract voidable – remedy: rescission
Undue Influence
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
Protection of one party where the other party exercises a position of power over them

Actual Undue Influence (evidence that undue influence was in fact exerted)
o O’Flanagan –v- Ray-Ger Limited

Presumed Undue Influence (special relationship where undue influence is presumed – possible to
rebut presumption)
o First category - automatic presumption based on confidential relationship (Lawless v
Mansfield (solicitor/client); Mulhallen v Marum (guardian/ward); White v Meade, Allcard v
Skinner (religious order/devotee); McMackin v Hibernian Bank (parent/child));
o Second category – complainant establishes that there is a relationship similar in nature to
same (R v Hutton; RBS v Etridge; Armstrong v Armstrong (siblings); Tolhurst v Smith
(members of pop group); McGonigle v Black (uncle/nephew - placing of trust is key); Gregg v
Kidd (siblings); Lloyd’s Bank v Bundy (bank/customer); Credit Lyonnais Bank Nederland v
Burch (employer/employee);
o Special position and case-law regarding married couples. Not falling into first category above,
but variety of case-law on point (new developments now with Irish courts following Etridge
more recently) – Barclays Bank –v- O’Brien (leading English case – set out steps to be taken);
Bank of Ireland –v- Smyth (leading Irish case adopts O’Brien); Bank of Nova Scotia –v- Hogan;
Royal British Bank –v- Etridge (modified law in England– bank on notice any time wife
guarantees husband’s debts); Ulster Bank v Fitzgerald; Ulster Bank v Roche (seemed to adopt
Etridge but did not set out steps to be taken); GE Capital Woodchester Home Loans v Reade)
o Possible to rebut presumption – independent legal advice etc (McMackin v Hibernian Bank;
Inche Noriah v Shaik Allie Bin Omar; Provincial Bank v McKeever)
o Contract voidable – remedy of rescission

Unconscionable Bargain (no threats, no undue influence, but unfair advantage)
four elements to be established (Boustaney –v- Piggott): Bargaining impairment (Grealish –vMurphy); Exploitation (Rae –v- Joyce); Manifestly Improvident (Rooney v Conway; Slator v
Nolan); Lack of Adequate Advice (Grealish v Murphy)
•
Illegal and Void Contracts
Illegality:
o Illegality at common law –
o Contracts to commit a crime or tort (exchange controls – Namlooze Venootschap D Faam v
Dorset Manufacturing; Westpac Banking Corporation v Dempsey; benefitting from wrong –
Beresford v Royal Insurance Co; Gray v Barr;)
o Contracts promoting immorality – Pearce v Brooks; note that societal mores may change
(Armhouse Lee v Chappel)
o Contracts tending to prejudice the administration of justice, including maintenance and
champerty (discontinue criminal legal proceedings – Nolan v Sheils; Keir v Leeman; promise
not to instigate legal proceedings – Rourke v Mealy; maintenance – Re Trepca Mines (No. 2);
Martell v Consett Iron; Hill v Archbold; champerty – Fraser v Buckle);
o contracts which breach foreign law (Stanhope v Hospitals Trust; Foster v Driscoll);
o contracts trading with enemies of the state (Furtado v Rogers; Ross v Shaw);
o contracts to defraud Revenue e.g. employment situation (position in England - Tomlinson v
Dick Evans U Drive; position in Ireland re unfair dismissal/wrongful dismissal – Lewis v Squash
Ireland; Unfair Dismissals (Amendment) Act; Hayden v Sean Quinn Properties; Red Sail Ltd (In
Receivership); Hall v Woolsten Hall Leisure; Wheeler v Quality Deep;)
o contracts to corrupt public officials (Lord Mayor of Dublin v Hayes)
o
o
Illegality under statute
matter of construction – does statute intend to render contract illegal (Archbolds v
Spanglett; Hortensius v Durack)
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•
Consequences of Illegality
o Unlawful on its face – void ab initio and severance not available (Gray –v- Cathcart; Murphy
–v- Crean; Hayden –v- Sean Quinn Properties; Re Mahmoud and Hispani)
o Performed illegally – party who intends to perform contract illegally cannot sue on contract;
if party who performs contract lacks requisite intention, they may be able to sue (St John
Shipping v Joseph Rank); if other party is unaware of illegality, they may have remedies
(Marles –v- Philip Trant & Sons; Whitecross Potatoes v Coyle); where both parties intend to
perform the contract illegally, the contract will be illegal and unenforceable (Ashmore v
Dawson)
o Recovery of property passed under illegal contract – general rule no recovery (Collins –vBlanton; Poteliakhoff v Teakle; Brady v Flood; St John Shipping v Joseph Rank); some
exceptions – lack of culpability (Deutsche Ruckversicherung v Walbrook Insurance); rights
independent of illegal transaction (Euro-Diam v Bathurst; McIlvenna v Ferris and Green);
sometimes even rights originating in illegal transaction (Singh v Ali); repentance (Tribe v
Tribe)
•
Void Contracts
o Distinct from illegal contracts, severance available as basis of public policy determining that
certain provisions should be deemed repugnant and potentially carved from the remainder
of a ‘saveable’ contract (Goodison v Goodison)
o Contracts ousting the jurisdiction of the courts (Lee –v- Showman’s Guild of GB , Scott –vAvery; Winterhur Swiss Insurance v ICI)
o Contracts subverting the sanctity of marriage (Lowe v Peers (agreements to marry/not
marry); Hermann v Charlesworth (matchmaker agreements); Marquess of Westmeath v
Marquess of Salisbury (future separations); MacMahon –v- MacMahon (distinction where
separation has already happened); Ennis –v- Butterly (contracts of cohabitation); Dalton v
Dalton, Gaffney v Gaffney (foreign divorces)
o Contracts in Restraint of Trade – must be reasonable and proportionate (Esso Petroleum –vHarper’s Garage; John Orr Ltd –v- Orr); must pursue legitimate interest (Vancouver Malt and
Sake Brewing Co v Vancouver Breweries) e.g. trade secrets (Forster & Sons v Suggett;
Faccenda Chicken v Fowler; Marshall (Thomas) Exports v Guinle) or connections/contacts
(Herbert Morris v Saxelby, Murgitroyd –v- Purdy;) must be proportionate in terms of
geography and location (Nordenfelt –v- Maxim Nordenfelt (can be worldwide); McEllistrem –
v- Ballymacelligott Co-Op (reasonableness of extent of restraint treated individually on its
merits); Office Angels v Rainer Thomas; Mulligan v Corr; Societa Esplosivi Industriali v
Ordnance Technologies;) must be in public interest (Fitch v Dewes);
•
Severance (blue pencil test)
o Main distinction between illegal and void contracts, the latter may be saved by severing the
repugnant part out – the so-called ‘blue pencil’ test – leaving the rest enforceable (Attwood v
Lamont; John Orr Ltd –v- Orr; Skerry, Wynne & Skerry’s College v Moles; Cussen v O’Connor;
Mason v Provident Clothing and Supply Co – cannot rewrite contract)

Discharge of Contracts
Four ways in which a contract may be discharged: agreement; performance; frustration and
certain breaches of contract (i.e. repudiatory, fundamental, breach of condition)

Agreement
o Must be mutual agreement, accord and satisfaction present.

Performance
o Entire Contract – very harsh, but matter of construction whether formed or not (Nash –
v- Hartland , Cutter v Powell; Coughlan –v- Moroney; Re Moore v Landauer; Collen v
Marum)
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o
o
o
Substantial Performance – exception at equity (Boone v Eyre; Hoenig –v- Issacs , Bolton
–v- Mahadeva , Kincora Builders –v- Cronin)
If voluntarily acceded to some level of part / incomplete performance, that can be
binding – Sumpter –v- Hedges
Payment for part performance can also be due if contract is a divisible contract (Taylor
–v- Laird , Brown –v- Wood); if complete performance is prevented by the other party
(Planche –v- Colburn; Arterial Drainage v Rathangan River Drainage Board); if an
attempt has been made to perform (Startup v MacDonald)

Breach
o Repudiatory (other party indicates intention not to perform contract) – Athlone Rural
DC –v- Campbell & Son; breach must be serious (Decro Wall International v Practitioners
in Marketing); breach must be deliberate (Nottingham BS v Eurodynamics; Woodar
Investment v Wimpey Construction; Continental Oil v Moynihan; Eminence Property
Developments Ltd v Heaney (reasonable person would have realised mistake); can bring
contract to an end immediately or wait until breach (Hochster v De La Tour; Leeson v
North British Oil);
o Fundamental – Union Eagle v Golden Achievement (would not be reasonable to expect
other party to continue with contract); Dundalk Shopping Centre Ltd –v- Roof Spray
Limited (seriousness and likelihood of recurrence); Leopardstown Club v Templeville
Developments and Philip Smyth
o Breach of Condition - Union Eagle v Golden Achievement (time was of the essence; no
prejudice need be caused); Sepia Ltd v M&P Hanlon (time can become of the essence
e.g. notice to complete)
o Consequences – innocent party may choose to discharge the contract (prospective
effect), may affirm the contract or may lose the right to treat the contract as discharged
where there is delay

Frustration
o Doctrine has evolved to deal with scenarios where obligations can no longer be
performed as a result of circumstances outside the control of either party
o Traditional position - Paradine –v- Jane; Gamble –v- The Accident Insurance Company
o Doctrine developed - Taylor –v- Caldwell (somewhat a relaxation to avoid harsh results)
o Difference between impossibility and mere difficulty - Tsakirooglou v Noblee and Thorl;
Davis Contractors –v- Fareham UDC, Zuphen –v- Kelly; National Carriers Ltd v Panalpina
(Northern) Ltd (must be substantial re entirety of contract)
o Frustration of purpose – Krell –v- Henry ,Herne Bay Steam Boat –v- Hutton , National
Carriers Ltd –v- Panalpina
o Intervening illegality – Reilly v R; Rally Bros v Compania Naviera Soto y Aznar; Fibrosa
Spalk Akeyjna v Fairbarin Lawson Combe Barbour; Ross v Shaw; Ó Cruadhlaoich v
Minister for Finance
o Whether event of frustration was foreseeable or not/provided for in contract – Brown v
Mulligan , McGuill –v- Aer Lingus and United Airways , Ocean Tramp tankers Corp v V/O
Sovfracht, The Eugenia; Neville & Sons Ltd –v- Guardian Builders Ltd (risk obvious to
both parties but not provided for in contract); Jackson v Union Marine Insurance;
Metropolitan Water Board v Dick Kerr
o Self-induced frustration shall not suffice to enable a discharge of contract - Constantine
Line v Imperial Smelting Co; Herman v SS Vicia; FC Shepherd v Jerrom (outlier)
o Effect of frustration – discharges parties from future obligations (Krell v Henry; Chandler
v Webster; Appelby v Myers (unfair results re entire contract); Fibrosa (exception where
no tangible benefit))
Remedies
•
Damages
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o
o
o
Causation – injured party must prove that party in breach wholly/partially caused damage;
s.2 of the Civil Liability Act 1961 re reduction in damages where injured party is partially
responsible
Remoteness – Hadley –v- Baxendale (damages flow naturally from breach, or damages in
contemplation parties to be probable result of breach); Victoria Laundry –v- Newman
Industries (that which flows naturally, plus that which is ‘reasonably foreseeable’ from the
knowledge of the party in breach, are damages capable of recovery); first limb - Wilson and
Dunville; Lee and Donoghue v Rowan; second limb - Waller –v- Great Western Railway ,
Victoria Laundry v Newman Industries; The Heron II , Kemp –v- Instasun Holidays Ltd;
Transfield Shipping v Mercator Shipping, The Achilleas (overrun or lost profits);
Requirement on plaintiff to mitigate his loss – Brace –v- Calder , Cullen –v- Horgan; Payzu v
Saunders; Lennon –v- Talbot (Ireland) (courts will not impose unrealistic standards);
Beechwood Birmingham v Hoyer Group;
o
Heads of loss: expectation loss – Afton v Film Studios of Ireland; Hawkins v Rogers; Blackpool
and Flyde Aero Club v Blackpool; as an alternative to expectation, reliance loss – Anglia
Television –v- Reed; Bowlay Logging v Domtar (breach averted loss); Hennigan v Roadstone
Wood (damages for misrepresentation and reliance loss); restitution loss - Hickey –v- Roches
Stores; consequential loss – Stoney v Foley; Leahy v Rawson (cost of cure); Ruxley Electronics
v Forsyth; loss of reputation – Malik v BCCI
o
Estimating damages: nominal (O’Keeffe v Kilcullen; ESL Consulting Services v Verizon);
contemptuous (Grealey v Casey); General and special (Raticliffe v Evans); Punitive/exemplary
(Conway v INTO; Rookes v Barnard; Francis Shortt v Commissioner of An Garda Síochána);
speculative (Grafton Court v Wadson Sales); aggravated (Francis Shortt); compensatory
Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (damages reduced as charterers
would have exercised an option to cancel the contract in the event of war)
Acre 1127 Ltd (In Liquidation) formerly known as Castle Galleries Limited (In Liquidation) v De
Montfort Fine Art Ltd (1), the Court found that proof of a settled intention not to perform an
agreement is material in the assessment of damages recoverable for repudiatory breach.
o
o
o
o
Damages for intangible loss (“loss of chance”)
McRae v Commonwealth Disposals Commission (no parameters to evaluate); Hawkins v
Rodgers (potential value discounted by probability); Hickey v Roches Stores (potential loss of
profit over 2 years)
o
o
Damages for emotional distress and related situations
Not recoverable in general (Hobbs –v- London South Western Railway; Phelan Holdings v Poe
Kiely Hogan; Kelly v Crowley) unless purpose of contract is to provide entertainment or
enjoyment (Jarvis –v- Swan Tours; Dinnegan and Dinnegan v Ryan)
o
o
Penalty Clauses / Liquidated Damages / Acceleration Clauses
Liquidated damages clause attempts to assess damages likely to be suffered and is
permissible, whereas penalty clause seeks to punish and is not permissible
Test established in Dunlop Pneumatic Tyre –v- New Garage & Motor Co (amount
disproportionate to all possible consequences of breach; amount is the same regardless of
nature and extent of damage; clause requiring larger sum to be paid on failure to pay lesser
sum) – recently modified by Cavendish v El Makdessi; ParkingEye v Beavis (new test is
whether the clause is a secondary obligation which imposes a detriment which is out of
proportion to the legitimate interest of the innocent party; legitimate interest can include
enforcing performance beyond being compensated for loss)
Dunlop Pneumatic Tyre applied in Ford Motor v Armstrong; Jobson v Johnson; Schiesser
International v Gallagher; O’Donnell & Co. Ltd –v- Truck and Machinery Sales Ltd
Acceleration clauses (default triggers requirement for immediate payment in full) –
Protector Loan v Grice; The Angelic Star; UDT v Patterson
o
o
o
Two lines of case law have emerged which provide exceptions to this general rule: (i) where there has
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been a genuine pre-estimate of loss; and (ii) where there is commercial justification.
Focus of preparation on the foregoing listed would be to prepare same for an essay approach – with
parts thereof called out for a multi-part essay question. Scope of recovery for ‘disproportionate’
damages – even if within strict assessment scope of expectation loss has also been more a point of
consideration in recent problem questions.
•
Other Remedies (several seen above on specific areas)
o Specific Performance - be alive to principles of restriction, not where damages are an
adequate remedy (Bagnell v Edwards; Sky Petroleum v VIP Petroleum (unique nature); Swift v
Swift (difficulty quantifying); Beswick v Beswick (nominal damages)); not for contracts of
personal service (Lumley v Wagner; Warren v Mendy); contracts not where contract requires
court supervision (Ryan v Mutual Tontine Association); not where it may be refused on
equitable grounds e.g. hardship (Denne v Light; Patel v Ali)
o Injunctive relief – prevent someone from doing something they contracted not to do rather
than force someone to do what they contracted to do (Lumley v Wagner, Page One Records v
Britton) and not where damages adequate (AB v CD)
o Restitution – where there has been complete failure of consideration
o Quantum Meruit – British Steele v Cleveland Engineering; Folens v Minister for Education;
Gilbert & Partners v Knight; Callinan v VHI; ERDC Group v Brunel University
o Rectification – where written document does not reflect prior agreement
o Rescission – available in a limited number of circumstances e.g. mistake and
misrepresentation
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Recent Developments in Contract Law
European Commission's online dispute resolution (ODR) Directive
Since 15 February 2016, traders established in the EU that sell or provide goods or services online to
consumers must provide a link on their websites to the European Commission's online dispute resolution
(ODR) platform. Such traders must also include their email address on their website so that consumers have a
first point of contact in the event of a dispute. This obligation is set out in Article 14 of EU Regulation No.
524/2013 (the ODR Regulation) and by virtue of the EU (Online Dispute Resolution for Consumer Disputes)
Regulations 2015 (S.I. 500/2015) contravention of Article 14 of the EU ODR Regulation is an offence under Irish
law. The obligation applied from 9 January 2016 but the ODR platform will not be fully opened for use by
consumers and traders until 15 February 2016.
Article 14 of the ODR Regulation builds on Article 13 of EU Directive No. 2013/11 (the ADR Directive) which
obliges Member State to ensure that traders established within the EU inform consumers about an ADR entity
which covers the trader where the trader has committed or is obliged to use the ADR entity to resolve disputes
with consumers. Article 13 of ADR Directive was implemented in Ireland by Regulation 18 of the EU
(Alternative Dispute Resolution for Consumer Disputes) Regulations (S.I. 343/2015). Both the ADR Directive
and the ODR Regulation are intended to contribute to consumer protection by providing for simple, efficient,
fast and low cost ways of resolving domestic and cross border disputes which arise from sales or services
contracts.
What do online traders need to do to comply?
Article 14(1) of the ODR Regulation requires all traders established in the EU, who engage in online sale or
services contracts, and all online marketplaces established within the EU to provide:
(i) an electronic link to the ODR platform on their website, which is easily accessible; and
(ii) their email address on their website.
Article 14 (2) further requires traders established in the EU who engage in online sales or service contracts and
are committed or obliged to use an ADR entity to resolve disputes with consumers to provide:
(i) an electronic link to the ODR platform in an email, if a commercial offer is made to a consumer via
email; and
(ii) information as to the existence of the ODR platform in the general terms and conditions applicable
to online sales and service contracts.
Traders who breach Article 14 of ODR Regulation will be guilty of an offence and liable on summary conviction
to a class A fine up to(€5,000) and/or 12 months' imprisonment.
Penalty clauses
Generally speaking, the Courts are reluctant to strike down penalty clauses as this constitutes a "blatant
interference with freedom of contract" which is a key principle of the law. Nevertheless, when the courts do
intervene and determine a clause to constitute a 'penalty' it is typically unenforceable. Two lines of case law
have emerged which provide exceptions to this general rule: (i) where there has been a genuine pre-estimate
of loss; and (ii) where there is commercial justification.
There have been recent developments in relation to this rule with the UK Supreme Court decision in Cavendish
El Makdessi ; ParkingEye v Beavis [2015] UKSC 67, which concerned an appeal from a Court of Appeal decision:
The Supreme Court was unanimous that the doctrine of penalties should not be abolished, but their lordships
rejected the traditional test set down in Dunlop v Matthew Tyre Co Limited v New Garage Motor Co Limited
that a clause will be a penalty if it is not a genuine pre-estimate of loss and is extravagant or unconscionable,
or if its purpose is to deter a breach of contract. The majority of the Supreme Court held that the correct
approach in commercial cases was to have regard to the nature and extent of the innocent party’s (e.g. the
employer’s) interest in the performance of the obligation that was breached as a matter of construction of the
contract.
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The test, formulated by the majority, is whether the clause in question is:
“…a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to
any legitimate interest of the innocent party in the enforcement of the primary obligation. The
innocent party can have no proper interest in simply punishing the defaulter. His interest is in
performance or in some appropriate alternative to performance. In the case of a straightforward
damages clause, that interest will rarely extend beyond compensation for the breach, and we
therefore expect that Lord Dunedin’s four tests would usually be perfectly adequate to determine its
validity. But compensation is not necessarily the only legitimate interest that the innocent party may
have in the performance of the defaulter’s primary obligations.”
The Supreme Court went on to explain the practical application of the test in terms that a penalty clause
whose purpose is to punish the contract breaker is likely to be an unenforceable penalty clause. On the other
hand, a clause that is intended to deter a breach of contract is less likely to be a penalty clause, even if it does
not represent a genuine pre-estimate of loss. In order to determine whether or not a clause is a penalty, the
key is to consider whether the liquidated damages clause is out of all proportion to the employer’s legitimate
interest in enforcing the contractor’s obligations under the contract. If it is, it will be penal and unenforceable.
Significance
The decision of the UK Supreme Court in Cavendish Square Holdings BV (Appellant) v Tatal El Makdessi
(Respondent) has replaced the century-old test in Dunlop v Matthew Tyre Co Limited v New Garage Motor Co
Limited with a modern test that reflects the fact that in some circumstances, parties have a legitimate
commercial interest in enforcing the performance of contractual obligations which go above and beyond
compensation for any identifiable commercial losses they may suffer as a result of the breach, or the
deterrence of a breach of contract. In the construction context, this new test requires a consideration of the
commercial justification for the liquidated damages clause at the time the contract was entered into, and
whether it is out of all proportion to the employer’s legitimate commercial interest in the works completing on
time.
Whilst the new test is ultimately to be welcomed, there is plenty of scope for satellite litigation as to what
might amount to a “legitimate” commercial interest which will no doubt be played out in the courts in the
years to come.
Damages / misrepresentation
In Hennigan v Roadstone Wood Ltd [2015] IEHC 326, the High Court awarded a Plaintiff damages for breach of
contract and misrepresentation despite the fact that the contract was not recorded in writing. The case
illustrates the importance of producing strong corroborative evidence in proving the existence of an oral
agreement.
When is a Breach of Contract Serious Enough to Warrant Repudiation?
In the recent case of Leopardstown Club Ltd v Templeville Developments Ltd and Philip Smyth [2013] IEHC 526,
Charleton J. at the High Court dealt with a key practical issue in relation to termination of a contract, namely,
how serious must a breach of contract be to warrant repudiation? The decision shows that the ability to
terminate a contract for what is perceived by one party to be a breach, even a serious one, should never be
taken for granted.
The decision also usefully considers what constitutes a "mistake" giving rise to a right of termination; the
enforceability of "no set-off" clauses; when adverse inferences may be drawn by the court for failure to call
relevant witnesses; the circumstances warranting forfeiture of a lease; and the importance of proper
corporate governance.
Significance
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This case confirms the approach of the High Court in regard to how serious a breach of contract must be to
justify an innocent party bringing it to an end and seeking damages. It also highlights the relevance of the
conduct of the parties when considering this question.
The decision confirms that the starting-point, when considering whether a party may terminate a contract for
breach by the other party, is the terms of the particular contract. In many cases, there will be an express right
to terminate for breach of contract. In some cases, the contract will spell out what circumstances will give rise
to a right for one or both parties to terminate. However, as Charleton J. highlighted, no matter how
scrupulous the parties and their lawyers are, it is unlikely that they will think of every foreseeable event and
provide for what is to happen should one come to pass.
Therefore, when an event occurs, the occurrence of which neither party has expressly stated will discharge
one of the parties from further performance of his undertakings, it will be for the court to decide whether the
right of termination may be exercised. In considering whether or not a party may terminate the agreement,
the question for the court will be: "Does the occurrence of the event deprive the party who has further
undertakings still to perform of substantially the whole benefit which it was the intention of the parties as
expressed in the contract that he should obtain as the consideration for performing those undertakings?"
Continuing misrepresentations can be acted upon by the ultimate contracting party
As a matter of general principle, a representation made during contractual negotiations for the purpose of
inducing a contract will ordinarily be regarded as continuing until the contract is actually concluded because it
will generally be reasonable for the representee to continue to rely on it.
In Cramaso LLP v Ogilvie-Grant [2014] UKSC 9, the UK Supreme Court held that a negligent misrepresentation
is capable of having a continuing effect up until the time when the contract is concluded, where the person to
whom the representation is addressed becomes the agent of the person by whom the contract is concluded.
In principle, this means that a contracting entity would be entitled to sue for rescission and damages, even
though the negligent misrepresentation was not actually made to it.
This case is likely to be of persuasive authority before the Irish Courts. Whilst there is nothing new in the
concept of a continuing misrepresentation, what is new is the ruling that the misrepresentation can be acted
upon by a legal person to whom no such representation was made and which was not even in existence at the
time the representation was made. Liability for pre-contractual or other misrepresentation may be excluded or
limited in the agreement ultimately signed, but in circumstances where it is not, this decision will undoubtedly
be of significance.
Entire agreement clauses / exclusion clause / misrepresentation
The UK Court of Appeal recently considered in Axa Sun Life Services Plc v Campbell Martin Ltd (1) whether an
"entire agreement" clause prevented claims for misrepresentation, breach of collateral warranties and/or
implied terms. Entire Agreement clauses are increasingly used in standard form commercial contracts. Such
clauses can operate as an effective exclusion clause. They are intended to limit any claim to the four corners of
the written contract (2) regardless of what may have been said in negotiations. A typical clause will stipulate
that the agreement is the entire agreement between the parties, to the exclusion of any other terms or
representations prior to its execution. Such clauses are often seen as "boiler plate" but their scope may be
more limited than parties appreciate. The Axa case is the latest example of the restrictive approach adopted by
the Courts in construing such clauses, particularly in determining whether they exclude liability for precontractual misrepresentations.
The Axa decision indicates that in a business-to-business context, where there is relative equality of bargaining
power and the clause has been negotiated (7), a carefully drafted entire agreement clause is likely to be
regarded as "fair and reasonable", thereby satisfying the statutory reasonableness requirements of the UCTA,
and similarly section 46(1) of the Irish Sale of Goods and Supply of Services Act 1980. 1980 Act.
The Irish courts could well adopt a similar approach to the interpretation of such provisions. The
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reasonableness of any such provision could also be an issue in respect of many types of contracts under Irish
law.
Merchantable quality / implied terms
Terms and conditions on delivery dockets not incorporated into contract by reference (20 January 2015)
The Supreme Court has dismissed an appeal by Irish Asphalt in Noreside Construction Ltd v Irish Asphalt [2014]
IESC 68.
Dunne J. (O'Donnell J, and MacMenamin J. concurring) found there was one "master" contract for sale agreed
at senior management level between the parties. She rejected Irish Asphalt's claims that the terms and
conditions referred to, but not contained, in the delivery dockets were incorporated in to the contract by
reference or by custom and practice, so as to limit their liability to the costs of replacement of the defective
goods.
The Court found that there was a "master" contract, and on every subsequent occasion when an order was
placed and a delivery of aggregate was made, a separate and distinct contract was made in respect of each
such delivery which incorporated the terms and conditions of the "master" agreement.
Status of the delivery dockets
The Supreme Court concluded that the delivery dockets were not contractual documents. Dunne J noted that
the authorities show that whilst a delivery docket can be a contractual document – "whether it is or not
depends on the facts and circumstances in a particular case. The purpose for which the delivery docket was
created may be of relevance". She stated that the crucial point is that the delivery docket or other document
at issue must contain the relevant terms and conditions or at the very least contain a reference to terms and
conditions well known in a particular industry.
The phrase "The material is sold subject to our terms and conditions available on request" on the delivery
dockets was not sufficient for the purpose of making or varying a contract.
Requirements for a binding contract for sale of land
Considered in Maloney v O'Connor 2015 IEHC 678 (24 November 2015)
In this unusual case the High Court considered the enforceability of a contract for the sale of land to a
construction company now in receivership, with much of the argument surrounding whether there was in fact
a sufficient note or memorandum in writing.
The contract for sale dated 9 April 2003, when coupled with the note to file written by the Purchaser's
solicitor and referred to above, between them comprised a note or memorandum in writing sufficient
for the Vendors to rely upon for the purposes of section 2 of the Statute of Frauds (Ireland) 1695
(since replaced by section 51(1) of the Land and Conveyancing Law Reform Act, 2006) – the two
documents together clearly record or acknowledge a concluded agreement.
Consistent with the contract for sale of 9 April 2003 which (i) was agreed for good
consideration and (ii) is an adequate "note or memorandum" in writing of what was agreed between
the parties, there had been an agreement between the parties that:
(a) the consideration for the sale of the Property was to be the cash consideration plus the
Split Benefit;
(b) absent the combined consideration there would have been no sale; and
(c) what subsists between the parties is a single contract with the consideration split into two
elements, rather than a main contract with a collateral contract with regard to the Split Benefit.
Even if the Split Benefit arrangement was construed as a collateral contract, the Receiver was
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estopped from acting inconsistently with it and the main contract.
The equitable maxim of "he who seeks equity must do equity" could be relied upon by the
Vendors to defeat the Receiver's application. The Court held that the order sought was effectively one
of specific performance and that a claimant will not be granted specific performance of a contract
unless he can establish that he is willing and able to carry out his own contractual obligations. Barrett
J. held that the Purchaser / Receiver had not so satisfied the Purchaser's contractual obligations as a
central obligation under the contract, namely the discharge of an element of the consideration,
remained outstanding.
Rule against penalty clauses
In the recent English case of Edgeworth Capital (Luxembourg) S.A.R.L. and another v Ramblas Investments
B.V.[2015] EWHC 150 the UK High Court held that the rule against penalties did not apply to a fee payable for
the provision of financing, because the fee was payable in various circumstances, not just in the event of a
breach.
The decision demonstrates that the rule against penalties only applies in the event of a breach of a contractual
duty owed to the other party. The Court noted that this restriction of the rule has been criticised over the
years, on the grounds that it may lead to the rule being avoided by skilful drafting.
Limitation period for agreements for the sale of goods
Murphy v Joe O'Toole & Sons Ltd & Anor [2014] IEHC 486, Baker J. held that the limitation period for an
agreement for the sale of goods ran from the date of delivery of the goods, rather than from the date of the
contract was entered into by the parties.
The decision clarifies when time begins to run in actions for breach of contract for agreements for the sale of
goods, which are to be delivered at a later date. Baker J. noted in her judgment that there was no direct
authority on point as to the running of the limitation period in the case of an agreement for sale.
Damages an adequate remedy?
AB v CD [2014] EWCA Civ 229
Summary
The English Court of Appeal has held that a claimant seeking an injunction to prevent an alleged
wrongful termination of a contract was entitled to argue that damages could not be an adequate remedy for a
breach of contract because recoverable damages were limited by a clause in that contract.
The Court found that the rule that an injunction should not be granted where damages would be an adequate
remedy, should be applicable only where it is just and in the present circumstances it was just to grant an
injunction, as the loss caused by the threatened breach would not be recoverable in damages.
Repudiatory breach and damages
In a recent English Court of Appeal case, Acre 1127 Ltd (In Liquidation) formerly known as Castle Galleries
Limited (In Liquidation) v De Montfort Fine Art Ltd , the Court found that proof of a settled intention not to
perform an agreement is material in the assessment of damages recoverable for repudiatory breach.
Usually, when a repudiatory breach is accepted, the innocent party is relieved from performance of his
obligation under the contract. The innocent party is also relieved from proving that he was ready and willing at
the date of the renunciation to perform the contract in accordance with its terms (2). However, the English
Court of Appeal has held that proof of an intention by the innocent party not to perform is relevant in the
assessment of damages.
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When is a rescission not a breach?
The Court of Appeal clarifies the test for repudiatory breach in Eminence Property Developments Ltd v
Heaney (21 December 2010)
A repudiatory breach occurs where one party makes clear his intention no longer to perform his side of the
bargain. In a recent English Court of Appeal case, Eminence Property Developments Ltd v Heaney (1), the
Court clarified the test for repudiatory breach of contract. The Court overturned the High Court's decision and
found that a vendor of land had not acted in repudiatory breach of contract where, by mistake, he served
notices of rescission on the purchaser before the final date for complying with notices to complete had been
reached.
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Dublin City Centre (Dublin 2) and Online
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