LLB Contract Law - 2024 Paper 4

Bella agrees to sell her antique piano to Conrad for £15,000. Before the sale, Bella tells Conrad: "This piano was owned by Chopin and is worth at least £50,000. I am only selling it cheaply because I need the money urgently." In fact, Bella knows the piano was manufactured in 1920 and has no connection to Chopin. Conrad, an amateur musician with no expertise in antiques, buys the piano in reliance on Bella's statements. He later has the piano valued and discovers it is worth only £8,000. Conrad also discovers that Bella told her friend, Diana, that the piano was "a genuine Steinway from the 1890s." Diana, who overheard Bella's conversation with Conrad and believed the piano to be valuable, purchased a similar piano from an auction house for £30,000, which turned out to be worth £12,000. Advise Conrad and Diana on their respective claims against Bella.

Discuss the circumstances in which a contract may be discharged by breach. Critically evaluate the distinction between conditions, warranties, and innominate terms, and assess the practical significance of this classification for determining the innocent party's remedies. Reference should be made to Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha (1962), The Hansa Nord (1976), and the more recent approach in Sagar v Ridehalgh (1931) and Rice v Great Yarmouth Borough Council (2003). Consider whether the innominate term approach provides greater flexibility or merely creates uncertainty.

Apex Software Ltd develops bespoke software for businesses. It enters a contract with Sterling Bank plc to develop a new online banking platform for £2 million. The contract specifies delivery by 1 January. The contract contains no force majeure clause. In October, the UK Government introduces emergency cybersecurity regulations requiring all banking software to incorporate new encryption protocols. Compliance adds three months and £300,000 to the development cost. Apex informs Sterling that it will deliver by 1 April at the original price plus £300,000. Sterling refuses to pay the additional sum and insists on delivery by 1 January. Apex delivers the compliant software on 15 March. Sterling refuses to pay anything beyond the original £2 million and claims damages for the 10-week delay, including £500,000 in lost revenue from delayed customer migration. Advise both parties, considering frustration, change of circumstances, and the assessment of damages.

Fiona, a 19-year-old university student, visits a car dealership owned by SpeedMotors Ltd. Greg, a salesperson, shows Fiona a second-hand sports car priced at £18,000. Greg tells Fiona: "This car has a full service history and has never been in an accident." Fiona asks whether she can return the car if she is not satisfied. Greg replies: "Of course, we offer a 30-day money-back guarantee on all our vehicles." Fiona signs a purchase agreement which contains, in small print on the reverse, the following clause: "All vehicles are sold as seen. No returns or refunds will be provided. The buyer acknowledges that no representations have been made other than those contained in this agreement." After two weeks, Fiona discovers that the car was previously involved in a serious accident and the chassis is bent, making it unsafe to drive. The car is worth only £5,000. SpeedMotors refuses to accept a return, pointing to the clause in the contract. Advise Fiona.