LSE: Contract Law Exam Paper

Alice owns a vintage car restoration business. On Monday, she emails Bob offering to sell him a 1965 Mustang for £25,000, stating 'this offer remains open until Friday at 5pm'. On Tuesday, Bob replies by email: 'I accept your offer but can only pay £22,000 now and the remaining £3,000 in three months'. On Wednesday, Alice sells the car to Charlie for £26,000. On Thursday, Bob emails Alice: 'I now accept your original offer of £25,000'. Alice refuses to sell to Bob. On Friday at 4pm, David, who overheard Alice's original offer to Bob, emails Alice accepting the £25,000 offer. Advise all parties as to their contractual positions.

The doctrine of consideration has been described as 'an unnecessary obstacle to the enforcement of promises that ought to be legally binding'. Critically evaluate this statement with reference to both the traditional rules of consideration and proposals for reform.

TechCorp, a software company, enters into a contract with MegaBank to develop a bespoke banking system for £500,000, to be completed by 31st December. The contract contains a clause stating: 'TechCorp excludes all liability for any losses arising from delays in delivery or defects in the software, howsoever caused.' Due to TechCorp's negligent programming, the system crashes on its first day of operation (2nd January), causing MegaBank to lose £2 million in trading profits and suffer £300,000 in administrative costs while reverting to their old system. MegaBank discovers that similar software is available elsewhere for £200,000. TechCorp argues they delivered on time and any problems are excluded by their clause. Advise MegaBank on their prospects of recovering damages.

'The objective test for contractual intention represents a triumph of commercial certainty over subjective fairness.' Discuss this statement with particular reference to the formation of contracts and the interpretation of contractual terms.