13. Privity and the interests of third parties

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the privity rule, which states that only a party to the contract can sue upon it. It discusses the development of the privity rule, distinguishing the privity rule from the consideration rule, evading the privity rule, techniques for giving a right directly to a third party or apparent third party, specific performance in favour of a third party and damages for a third party’s loss, and the Contracts (Rights of Third Parties) Act 1999.

11. Damages

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the principles by which contractual damages are assessed. The discussions cover the aim of contractual damages, the difference between damages in contract and in tort; the relationship between the expectation interest and the reliance interest; cost of cure and difference in value; remoteness of damage; foreseeability and assumption of risk; non-pecuniary losses; mitigation; contributory negligence; and penalties, liquidated damages and forfeiture.

10. Frustration

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the frustration of a contract. Fundamental changes in the facts assumed by the parties, ‘frustrating events’ such as natural disasters and less catastrophic events, may fundamentally change the parties’ obligations and frustrate the contract. Frustration of a contract brings the parties’ obligations to an end; a less substantial, non-frustrating event will have no effect and the parties must continue to perform their obligations even if they have become more onerous. The discussions cover the allocation of risk, examples of frustration, limits on frustration, effects of frustration and the Law Reform (Frustrated Contracts) Act 1943.

7. Misrepresentation

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter is concerned with the territory just beyond the borders of the contract, where we find the representations which are not part of the contract but which influenced its creation and which, if false, are remedied by the law on misrepresentation. The discussions cover the key elements of the definition of misrepresentation; the differences between fraudulent, negligent and innocent misrepresentations; and the remedies of rescission and the various rights to damages. This also includes the bars on the right to rescind, the principles of assessment of damages and the controls on excluding liability for misrepresentation.

5. Positive terms

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. The terms of the contract give substance to the contractual parties’ obligations. They lay down what each party is expected to do in performance of his obligations, and so it is crucial in any dispute to first establish the terms of the contract before looking to see whether one party has failed to perform his obligations. This chapter focuses on the positive terms of the contract. The discussions cover terms and representations; collateral warranties; implied terms; and conditions, warranties and innominate terms and the significance of the remedies, including termination, attached to each.

4. Consideration and estoppel

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter explains the nature of consideration with the aid of examples and discusses two basic definitions of consideration (consideration as a legal benefit or burden and as the price of a promise) as well as the past consideration rule. It addresses whether performance of an existing duty can count as a legal benefit or burden to form consideration for a promise. It considers existing public duties, existing duties owed to a third party and existing duties owed to the promisor. The chapter examines the related rules concerning part payment of a debt and the extent to which promises not supported by consideration can be enforced using promissory estoppel.

12. Specific remedies

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter considers remedies that directly address the issue of providing the innocent party with the performance that was expected. Their use depends on a number of factors, which means that they are not universally available and that the claimant will therefore often be left to his remedy in damages. The discussions cover actions for the price or other agreed sum, the rule in White and Carter v McGregor, affirmation and anticipatory breach. The chapter goes on to discuss specific performance and injunctions and the tests of damages being inadequate, mutuality plus other factors such as personal service contracts and the relevance of the need for supervision.

6. Exemption clauses

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. Exemption clauses provide that one party will not be liable in certain situations; they exclude or limit liability. Exemption clauses have traditionally been frowned upon because they have been misused, often to the detriment of consumers, and the courts have responded by repeatedly looking for ways to cut them down. In recent years the Unfair Contract Terms Act 1977 has given the courts much stronger powers and the Unfair Terms in Consumer Contracts Regulations have strengthened the position of consumers. These statutory controls have recently been radically overhauled in the Consumer Rights Act 2015 and this chapter provides a full explanation of these complex developments.

2. Agreement

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. A contract requires that the parties reach an Agreement which normally consists of a matching offer and acceptance. This chapter discusses the following: the objective test of agreement; identifying an offer and acceptance; rejection, counter-offers and inquiries; communication of acceptance including the postal rule and the contrasting rule for revocation; mode of acceptance; the death of an offer; and unilateral contracts.

3. Certainty and the intention to create legal relations

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter discusses certainty and the intention to create legal relations. It first considers cases where the parties have used ambiguous or unclear language and then looks at cases where the parties have deliberately left terms to be agreed at a later date. In the former cases the agreement is often described as ‘vague’ in the latter cases it is described as ‘incomplete’. The chapter then turns to domestic agreements, commercial agreements, and executory and executed agreements.