Solicitors Qualifying Examination (SQE) Contract and Tort (FLK1) Syllabus

State the general rule on discharge by performance and its main exceptions.

General rule: performance must be complete and exact to discharge obligations (Cutter v Powell). Exceptions allowing partial recovery: substantial performance, divisible (severable) obligations, wrongful prevention of performance by the other party, acceptance of partial performance, and tender of performance that is rejected.

What is the doctrine of frustration and what is its effect?

Frustration discharges a contract automatically where, after formation, an unforeseen event (not the fault of either party) makes performance impossible, illegal, or radically different from what was agreed (Taylor v Caldwell; Davis Contractors). It is narrow — not triggered by mere hardship, increased expense, or events foreseen/provided for.

How does the Law Reform (Frustrated Contracts) Act 1943 allocate loss after frustration?

Money paid before frustration is recoverable and sums payable cease to be payable (s.1(2)), subject to the court allowing a payee to retain/recover expenses incurred. A party who obtained a valuable non-money benefit before frustration may be ordered to pay a just sum for it (s.1(3)).

What is an anticipatory breach and what options does the innocent party have?

An anticipatory breach occurs where one party indicates, before performance is due, that it will not perform (renunciation) or disables itself. The innocent party may either (1) accept the breach, terminate immediately and sue for damages, or (2) affirm and wait for the time of performance (keeping the contract alive for both) (Hochster v De La Tour; White & Carter v McGregor).

State the doctrine of privity of contract and its general consequence.

Privity means only the parties to a contract can sue or be sued on it; a third party cannot acquire rights or have obligations imposed under a contract to which they are not a party (Tweddle v Atkinson; Dunlop v Selfridge).

Under the Contracts (Rights of Third Parties) Act 1999, when can a third party enforce a term of a contract?

A third party may enforce a term if either (a) the contract expressly provides that they may, or (b) the term purports to confer a benefit on them (unless on a proper construction the parties did not intend it to be enforceable). The third party must be expressly identified by name, class, or description (s.1).

What is the aim of contract damages, and how is the expectation measure defined?

The aim is to put the claimant in the position they would have been in had the contract been properly performed (Robinson v Harman). The expectation (loss of bargain) measure compensates for the loss of the expected benefit, calculated as the difference in value or the cost of cure.

State the two limbs of the remoteness rule in Hadley v Baxendale.

Damages are recoverable for losses that (1) arise naturally, in the usual course of things, from the breach; or (2) may reasonably be supposed to have been in the contemplation of both parties at the time of contracting as the probable result of breach (i.e. losses from special circumstances known to the defendant).

What is the duty to mitigate in contract, and what are its three components?

The innocent party cannot recover for losses they could have avoided by reasonable steps. Components: (1) the claimant must take reasonable steps to minimise loss; (2) cannot recover for avoidable loss; (3) can recover reasonable costs incurred in attempting to mitigate. The burden of proving failure to mitigate lies on the defendant.

Distinguish a liquidated damages clause from a penalty clause.

A liquidated damages clause is a genuine pre-estimate of loss and is enforceable. A penalty clause is unenforceable. Modern test (Cavendish v Makdessi): a clause is penal if it imposes a detriment on the breaching party out of all proportion to the innocent party's legitimate interest in enforcing the primary obligation.

How are damages for non-pecuniary loss (e.g. distress) treated in contract?

Generally not recoverable in contract. Exception: where the very object of the contract was to provide pleasure, relaxation, or peace of mind (e.g. a holiday — Jarvis v Swans Tours; Farley v Skinner), or to prevent distress, modest damages for disappointment may be awarded.

What is the difference between damages and equitable remedies, and what governs the grant of the latter?

Damages are a common law remedy available as of right for breach. Equitable remedies (specific performance, injunction, rescission, rectification) are discretionary, granted only where damages are inadequate, and subject to equitable bars (delay/laches, clean hands, hardship, third-party rights).

What is specific performance and when will it generally be refused?

Specific performance is an equitable order compelling a party to perform their contractual obligations, granted where damages are inadequate (e.g. sale of land/unique goods). Generally refused for: contracts of personal service, contracts requiring constant supervision, where damages are adequate, want of mutuality, or where it would cause undue hardship.

Distinguish prohibitory and mandatory injunctions, and state when an injunction may enforce a contract.

A prohibitory injunction restrains a party from breaching a negative obligation (e.g. a restraint clause); a mandatory injunction compels a positive act. An injunction can indirectly enforce a personal-service contract by restraining a negative promise, but not if it effectively compels performance or leaves the defendant with no realistic alternative but to perform (Warner Bros v Nelson).

Define restitution and unjust enrichment, and state the four-stage analysis.

Restitution reverses unjust enrichment — it strips a gain rather than compensating a loss. The four questions: (1) Was the defendant enriched? (2) Was the enrichment at the claimant's expense? (3) Was the enrichment unjust (an 'unjust factor' e.g. mistake, failure of consideration, duress)? (4) Are there any defences (e.g. change of position)?

What is a quantum meruit claim and when does it arise?

Quantum meruit ('as much as he has earned') is a restitutionary award of a reasonable sum for services rendered. It arises where work is done but no price was agreed, where a contract is unenforceable or void, or where work is requested and accepted outside a binding contract.

State the three elements a claimant must prove to establish the tort of negligence.

(1) The defendant owed the claimant a duty of care; (2) the defendant breached that duty (fell below the standard of a reasonable person); and (3) the breach caused the claimant's loss, which was not too remote (causation and remoteness of damage).

State the Caparo three-stage test for establishing a novel duty of care.

(1) Reasonable foreseeability of harm to the claimant; (2) a relationship of sufficient proximity between claimant and defendant; and (3) it is fair, just and reasonable to impose a duty (Caparo v Dickman). For established categories, the courts now reason incrementally by analogy rather than applying Caparo afresh (Robinson v CC West Yorkshire).

How is the standard of care in negligence defined, and how is it modified for professionals and learners?

The standard is that of the reasonable person doing the activity in question (objective; Blyth v Birmingham Waterworks). Professionals are judged by the standard of a reasonable member of that profession (Bolam — acting in accordance with a responsible body of opinion, subject to Bolitho logic). Learners/inexperienced defendants are held to the standard of the competent practitioner (Nettleship v Weston).

What factors does the court weigh when deciding whether the standard of care was breached?

The likelihood (probability) of harm; the seriousness of potential harm; the cost/practicability of precautions; and the social utility of the defendant's activity. The greater the risk and gravity of harm relative to the burden of precautions, the more likely a breach.

State the 'but for' test for factual causation and the rule for remoteness of damage in tort.

Factual causation: 'but for' the defendant's breach, would the harm have occurred? If the harm would have happened anyway, causation fails (Barnett v Chelsea Hospital). Remoteness (legal causation): the kind/type of damage must be reasonably foreseeable (The Wagon Mound No 1); the precise extent or manner need not be (egg-shell skull rule applies — take your victim as you find them).

What is the general rule on recovery for pure economic loss in negligence?

Pure economic loss (financial loss not flowing from physical injury to the claimant or their property) is generally not recoverable in the tort of negligence (Spartan Steel v Martin), for fear of indeterminate liability. It is distinct from consequential economic loss, which is recoverable.

State the requirements for recovering pure economic loss caused by a negligent misstatement (Hedley Byrne liability).

Recovery requires a 'special relationship' based on an assumption of responsibility by the defendant and reasonable reliance by the claimant: (1) the defendant possessed special skill/knowledge; (2) the defendant knew or ought to have known the claimant would rely on the statement; (3) the claimant reasonably relied on it; and (4) it was reasonable for the claimant to do so (Hedley Byrne v Heller).

Distinguish a primary victim from a secondary victim in claims for psychiatric harm.

A primary victim is within the zone of physical danger or reasonably believes they are; they can recover for psychiatric injury if physical injury was foreseeable (Page v Smith). A secondary victim witnesses harm to others and must satisfy additional control mechanisms; they need not be in physical danger themselves.

State the Alcock control mechanisms a secondary victim must satisfy to recover for psychiatric harm.

(1) A recognised psychiatric illness (not mere grief); (2) a close tie of love and affection with the primary victim; (3) proximity in time and space to the event or its immediate aftermath; (4) the shock was caused by directly perceiving the event/aftermath with one's own unaided senses; and (5) psychiatric harm to a person of normal fortitude was reasonably foreseeable (Alcock v CC South Yorkshire).

What duty does an employer owe to employees, and what are its components?

An employer owes a non-delegable personal duty to take reasonable care for the employee's safety (Wilsons & Clyde Coal v English), comprising: (1) competent staff/co-workers; (2) a safe place of work; (3) safe and proper plant and equipment; and (4) a safe system of work (including supervision).

What is vicarious liability and what are its two requirements?

Vicarious liability makes an employer strictly liable for torts committed by an employee. Requirements: (1) a relationship of employment (or akin to employment); and (2) the tort was committed in the course of employment — i.e. a 'close connection' between the wrongful act and the employee's authorised duties (Lister v Hesley Hall; Mohamud).

Compare the duty owed under the Occupiers' Liability Act 1957 with that under the 1984 Act.

OLA 1957: the occupier owes lawful visitors a 'common duty of care' — to take reasonable care to see the visitor is reasonably safe in using the premises for the permitted purposes (s.2(2)). OLA 1984: the occupier owes trespassers a more limited duty (to take reasonable care for their safety against a known danger) only if the s.1(3) conditions are met, and only for personal injury (not property damage).

Distinguish the defences of contributory negligence and volenti non fit injuria, including their effect.

Contributory negligence (Law Reform (Contributory Negligence) Act 1945): the claimant's own fault contributed to the harm; damages are reduced by a just and equitable proportion — a partial defence. Volenti non fit injuria: the claimant voluntarily and freely accepted the full legal risk with knowledge of it; it is a complete defence, barring the claim entirely. Illegality (ex turpi causa) is also a complete defence.