Chapter 10

1. 'Signatures are still treated as binding the signatory almost absolutely, as if some kind of magic operated to take the contract out of the usual rules that govern the formation of contracts'. Discuss.

See 10.3.3.1.

This question invites you to state and assess the signature rule of incorporation. The sub-questions you should consider are:

What is the general rule about signed documents?
What exceptions exist to the rule?
What can be said in favour of the current law?
What criticisms can be made of it? Note the academic arguments.
The quotation suggests that the current law is at odds with the 'usual rules' governing contract formation. What is this about? Is it true? Specifically consider the objective test of contract formation and the Canadian approach to signed documents.
Is there a viable alternative to the current law? How should, if at all, the law be reformed?

2. 'It is well known that people hardly ever read printed conditions on a ticket or delivery note or similar document. If they did, they would probably not understand them. And if they did understand and object to any of them, they would generally be told to take it or leave it.' To what extent has the law recognised this in determining the enforceability of terms?

See 10.1. and really, all of chapters 10-12.

This is a very broad question inviting you to consider the problems raised by standard form contracting and assess how well the law deals with them. The sub-questions you should consider are:

What are the problems posed by standard form contracts (pay attention to the quotation)? Are there any advantages to standard form contracts?
What techniques are available to the courts to control any problems? Be exhaustive in discussing as many as you can of the common law and statutory controls. Note, for example, that some implied terms are not excludable by agreement.
Can anything be gleaned from the way that courts apply the rules? Are these techniques directed at procedural unfairness or substantive unfairness?
How effective are these techniques? Is there, should there be, greater transparency in what courts are doing?
Do you have any suggestions for reforming the law in this area (note the Law Commission's suggestions in its Report on Unfair Contract).

3. 'The law on implied terms is very difficult to state; the test for implication is unclear and the categories shade into each other.' Discuss.

See 10.4

This question invites you to state and assess the law on implied terms. The sub-questions you should consider are:

What are the categories of implied term?
What is the test for implication in each category?
Identify and explain the points of uncertainty (e.g. distinction between reasonableness and necessity) and potential overlap (e.g. terms implied in law by the courts and those implied in fact)?
What are the policy considerations in play? What are the pros and cons of implying terms? E.g. to what extent is uncertainty inevitable and justifiable to alleviate the potential harshness of non-negotiated (usually) contracts?
To what extent is it possible and desirable to reform the law? How?

4. 'The capacity of contract law to find implied terms and collateral terms undermines the freedom of contract.' Discuss.

See 10.4 and 10.3.2.

This question invites you to consider the extent to which the finding of implied terms and collateral terms contradicts the parties' actual agreement. The sub-questions you should consider in respect of implied terms and collateral terms are:

When are terms implied/collateral terms?
To what extent do implied terms/collateral terms give effect to the presumed intention of the parties? To what extent do they further other goals (e.g. the protection of one party's reasonable expectations)?
To what extent, if at all, are implied terms/collateral terms permitted to vary, add to or contradict the parties' express terms? What light does the answer throw on the question?
In so far as implied terms/collateral terms do not seek to implement the will of the parties, how, if at all, does this undermine the parties' freedom to determine the contents of their contract? Is any such undermining justifiable? If so how?

5. Amos' advertisement for his airport car hire service states that 'We'll send you on your way in minutes'. Consider the following situations:

(a) Bella is late for a business meeting and she quickly signs Amos' standard form without reading it after Carol (A's employee) tells Bella 'It's all standard stuff.' The car breaks down within an hour of her journey. Bella incurs £150 cost to get to her meeting. Amos claims that Bella owes him £250 for the hire period and £200 for his costs in towing the car back to Amos' premises, as stipulated in the contract. Advise Bella.

See 10.3.3.

Is Bella liable to pay the £250 and £200 Amos is demanding?

Does the signature rule apply?
Has there been a misrepresentation as to the contents of the signed document by Carol? What is the significance if there is?
Is there any other way out for Bella? Note Spencer's suggestion of properly applying the objective approach to contract formation and the Canadian approach.
The answer may also depend on the issue of termination which is discussed in chapter 13. Can Bella not pay the hire fee by terminating the contract for breach of a serious term? Has Amos breached a term (express, implied or collateral)? If so, is it a condition (or an innominate term the breach of which deprives Bella of substantially the whole benefit she was intended to receive)?

Can Bella sue Amos for her pecuniary loss of £150?

(b) Don is in no hurry and chats to Carol who hands over the keys to Don. As he enters the car, Carol rushes up and hands him Amos' standard form contract but she forgets to ask him to sign. The breaks in the car fail causing Don to crash; Don's valuable painting is damaged but Amos states that he has excluded all liability in the contract. Advise Don.

Is the unsigned document binding on Don? Has Don had timely and adequate notice? Does the fact that the document was intended to be signed make any difference?

Has there been a breach by Amos? If the document is part of the contract, is the term excluding liability for personal injury enforceable? What about the exclusion of liability for property damage?

(c) Erik is a regular business customer. On this occasion he is not asked to sign Amos' newly revised standard form contract. He takes the car for three days and returns it an hour late. He is told that, as per the contract, he is liable to a £300 surcharge for late return. Advise Erik.

Is Erik bound to pay the surcharge? Can Amos argue that there has been incorporation by previous dealing? Even if he can, might the term be regarded as a penalty?

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