LLB Contract Law - 2024 Paper 3

GreenFields Ltd, a large supermarket chain, enters into a written contract with OrganicFarms Ltd, a small family-run supplier, for the delivery of 10,000 kg of organic tomatoes per month for 12 months at £3 per kg. Clause 14 of the contract states: "GreenFields Ltd may terminate this agreement at any time by giving 7 days written notice, without liability for any losses suffered by the supplier." Clause 15 states: "GreenFields Ltd shall not be liable for any indirect or consequential losses arising under or in connection with this contract." After 3 months, GreenFields terminates the contract because it has found a cheaper supplier. OrganicFarms has invested £80,000 in new greenhouses specifically for this contract and has turned down contracts with two other supermarket chains. OrganicFarms estimates its total losses at £250,000, comprising £80,000 investment costs, £120,000 lost profits for the remaining 9 months, and £50,000 for the contracts it turned down. Advise OrganicFarms on the enforceability of clauses 14 and 15, with reference to UCTA 1977 and common law principles.

Critically assess the distinction between terms and representations in contract law. Evaluate the factors courts use to classify pre-contractual statements and discuss whether the development of the Misrepresentation Act 1967 has rendered this distinction less significant. Consider the role of entire agreement clauses in modern commercial practice and their effectiveness in preventing reliance on pre-contractual statements, with reference to Inntrepreneur Pub Co v East Crown Ltd (2000) and AXA Sun Life Services v Campbell Martin (2011).

David and Emily are a married couple who decide to separate. They enter into an oral agreement whereby David promises to pay Emily £1,500 per month in maintenance for three years. In reliance on this promise, Emily gives up her full-time job to retrain as a teacher. After six months, David stops making payments, claiming the agreement is not legally binding because it was made between spouses and there was no intention to create legal relations. Meanwhile, David's employer, MegaCorp Ltd, runs a staff bonus scheme. The company handbook states: "MegaCorp may, at its discretion, award annual bonuses of up to 20% of salary to employees who exceed their performance targets." David has exceeded his targets for three consecutive years and received bonuses each time. This year, MegaCorp refuses to pay any bonus despite David exceeding his targets again, citing 'company restructuring'. Advise Emily and David on the enforceability of the respective agreements.

The doctrine of privity of contract has been described as producing unjust results. Critically assess the common law doctrine of privity and evaluate the extent to which the Contracts (Rights of Third Parties) Act 1999 has remedied its deficiencies. Consider the scope and limitations of the Act, including the circumstances in which third parties may enforce contractual terms and the ability of the contracting parties to vary or rescind the contract. Reference should be made to Tweeddale v Atkinson (1861), Jackson v Horizon Holidays (1975), and the statutory provisions.

Northwood Builders Ltd contracts with Riverside Properties Ltd to construct a luxury apartment block for £5 million, to be completed in 18 months. After 12 months, Northwood has completed 70% of the work but is facing severe cash flow problems. Northwood tells Riverside that it will cease work unless Riverside agrees to: (a) pay an additional £500,000; and (b) waive a clause entitling Riverside to liquidated damages of £10,000 per week for late completion. Riverside, which has already pre-sold 80% of the apartments to buyers who expect completion on time, reluctantly agrees. Northwood completes the building two months late. Riverside now seeks to: (i) refuse payment of the additional £500,000; and (ii) claim liquidated damages for the two-month delay. Advise Riverside, considering consideration, duress, promissory estoppel, and the enforceability of the liquidated damages clause.