CILEX Professional Qualification (CPQ) Foundation Stage: Contract Law Syllabus

Foundation Stage: Contract Law syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Foundation Stage: Contract Law in CILEX Professional Qualification (CPQ), not a summary of it.

1. 1

   Formation of a Contract

   4 topics

   • Offer and acceptance
     • Distinguishing offers from invitations to treat
     • Communication, revocation and lapse of offer
     • The postal rule and electronic acceptance
   • Consideration
     • Executed, executory and past consideration
     • Sufficiency, adequacy and existing duties
     • Promissory estoppel
   • Intention to create legal relations
     • Domestic and social agreements
     • Commercial agreements
   • Certainty and completeness of agreement
2. 2

   Terms of the Contract

   3 topics

   • Express and implied terms
     • Terms implied by statute, custom and the courts
     • The Sale of Goods Act 1979 and Consumer Rights Act 2015
   • Conditions, warranties and innominate terms
   • Exclusion and limitation clauses
     • Incorporation and the contra proferentem rule
     • Unfair Contract Terms Act 1977 controls
     • Consumer Rights Act 2015 unfair terms regime
3. 3

   Vitiating Factors

   4 topics

   • Misrepresentation
     • Fraudulent, negligent and innocent misrepresentation
     • Remedies and the Misrepresentation Act 1967
   • Mistake
     • Common, mutual and unilateral mistake
   • Duress and undue influence
   • Illegality and contracts contrary to public policy
4. 4

   Discharge of Contract and Remedies

   5 topics

   • Discharge by performance and agreement
   • Discharge by frustration
     • Frustrating events and impossibility
     • Law Reform (Frustrated Contracts) Act 1943
   • Discharge by breach
     • Repudiatory and anticipatory breach
   • Remedies for breach
     • Damages: causation, remoteness and mitigation
     • Liquidated damages and penalties
     • Equitable remedies: specific performance and injunctions
   • Privity of contract and third party rights

Foundation Stage: Contract Law flashcards for CILEX Professional Qualification (CPQ)

25 of 67 cards from the Foundation Stage: Contract Law deck — real questions with worked answers.

1. What are the three essential elements required to form a valid simple contract (besides capacity and legality)?

   (1) Offer and acceptance (agreement), (2) Consideration, and (3) Intention to create legal relations.

2. Define an 'offer' in contract law.

   A clear, definite expression of willingness to be bound on specified terms, made with the intention that it becomes binding as soon as it is accepted by the person to whom it is addressed (the offeree).

3. Distinguish an offer from an invitation to treat.

   An offer is capable of acceptance and creates a binding contract once accepted. An invitation to treat is merely an invitation for others to make offers (e.g. goods on display, advertisements, auction notices); it cannot be accepted to form a contract.

4. In Carlill v Carbolic Smoke Ball Co (1893), what type of offer was made and why was it binding?

   A unilateral offer to the whole world. The deposit of £1,000 showed intention to be bound, performance of the conditions (using the smoke ball as directed and still catching flu) constituted acceptance, and no communication of acceptance was needed.

5. List the ways in which an offer can be terminated.

   Acceptance, rejection, counter-offer, lapse of time, death of a party, failure of a condition, and revocation (withdrawal) before acceptance.

6. What is the effect of a counter-offer on the original offer (Hyde v Wrench)?

   A counter-offer destroys/rejects the original offer, which can no longer be accepted; the counter-offer becomes a new offer capable of acceptance by the original offeror.

7. Define 'acceptance' and state its key requirements.

   An unqualified, unconditional agreement to all the terms of the offer. It must be communicated to the offeror, made in response to the offer, and (generally) take the form required or a reasonable form.

8. State the postal rule of acceptance and when it applies.

   Where post is a reasonable means of acceptance, acceptance is complete and the contract formed when the letter is properly posted (not when received), per Adams v Lindsell. It does not apply to instantaneous communications or where the offer requires actual receipt.

9. When does acceptance by instantaneous communication (e.g. email, telex) take effect?

   When and where it is actually received by the offeror, not when sent (Entores v Miles Far East; Brinkibon).

10. Define 'consideration' (Currie v Misa).

    Some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. In short, the price for which the promise is bought.

11. State the rule that 'consideration must be sufficient but need not be adequate.'

    Consideration must have some recognised legal value (sufficiency) but the courts will not assess whether it represents a fair or equal exchange (adequacy). Even nominal or token value suffices (Chappell v Nestlé).

12. Explain the rule that 'past consideration is no consideration' and its exception.

    An act done before and independent of a promise cannot support that promise (Re McArdle). Exception (Lampleigh v Brathwait / Pao On): past consideration is valid where the act was done at the promisor's request, both parties understood it would be paid for, and payment would have been legally enforceable if promised in advance.

13. Does performance of an existing public duty amount to good consideration?

    No — performing an existing legal/public duty is not consideration (Collins v Godefroy). But exceeding that duty does provide consideration (Glasbrook Bros v Glamorgan CC; Harris v Sheffield United).

14. What is the rule in Pinnel's Case regarding part payment of a debt?

    Payment of a smaller sum on the due date cannot discharge a larger debt; part payment is not good consideration for releasing the whole debt (affirmed in Foakes v Beer), unless something new is added (earlier payment, different place, goods).

15. State the doctrine of promissory estoppel and the case establishing it.

    Central London Property Trust v High Trees House (1947): where a party promises not to enforce strict legal rights, intending the other to rely on it, and the other does rely, the promisor may be estopped (prevented) from going back on that promise. It is 'a shield, not a sword' and generally suspends rather than extinguishes rights.

16. Define 'intention to create legal relations' and state the two presumptions.

    The intention that an agreement be legally binding. Presumptions: (1) domestic/social agreements are presumed NOT intended to be legally binding (Balfour v Balfour); (2) commercial/business agreements ARE presumed to be legally binding (Esso v Commissioners). Both are rebuttable.

17. How can the presumption against intention in domestic agreements be rebutted?

    By evidence the parties intended legal consequences, e.g. spouses who are separated/separating (Merritt v Merritt), or clear financial reliance and certainty between family members (Parker v Clark).

18. What are the requirements of 'certainty and completeness' of an agreement?

    The terms must be sufficiently certain and complete for the court to enforce them. A vague agreement (Scammell v Ouston) or one leaving essential terms still to be agreed ('agreement to agree') may be void for uncertainty/incompleteness.

19. How may a court resolve apparent uncertainty in an agreement?

    By severing meaningless clauses (Nicolene v Simmonds), implying terms via statute or trade custom, applying a previous course of dealing, or relying on an agreed machinery for fixing terms (e.g. reasonable price under s.8 Sale of Goods Act 1979).

20. Distinguish express terms from implied terms.

    Express terms are those specifically stated and agreed by the parties (orally or in writing). Implied terms are not expressly stated but read into the contract by the courts, custom, or statute.

21. By what sources can terms be implied into a contract?

    (1) By statute (e.g. Consumer Rights Act 2015, Sale of Goods Act 1979); (2) by custom or trade usage; (3) by the courts in fact (to give business efficacy / 'officious bystander' test) or in law (necessary incidents of a type of contract).

22. Explain the 'business efficacy' and 'officious bystander' tests for implying terms in fact.

    Business efficacy (The Moorcock): a term is implied if necessary to make the contract work. Officious bystander (Shirlaw v Southern Foundries): a term is implied if it is so obvious that, had a bystander suggested it, both parties would have replied 'oh, of course'.

23. How are terms distinguished from mere representations?

    By the parties' intention, judged on: timing (the closer to contracting, the more likely a term), importance attached to the statement, whether it was reduced to writing, and the relative skill/knowledge of the maker (Oscar Chess v Williams; Dick Bentley v Harold Smith).

24. Define a 'condition' as a type of contract term and the remedy for its breach.

    A condition is a major/important term going to the root of the contract. Breach allows the innocent party to repudiate (treat the contract as ended) AND claim damages.

25. Define a 'warranty' as a type of contract term and the remedy for its breach.

    A warranty is a minor term, ancillary to the main purpose. Breach entitles the innocent party only to claim damages; it does NOT allow termination of the contract.

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