LLB Contract Law - Practice Paper 3

Atlas Manufacturing Ltd enters a 10-year supply agreement with Prometheus Energy plc for the supply of natural gas at a fixed price of 50p per therm. The agreement contains a "hardship clause" (Clause 18): "If, due to circumstances beyond the reasonable control of either party, performance becomes significantly more onerous for one party, the parties shall negotiate in good faith to adjust the terms of this agreement." Five years into the contract, new environmental regulations impose a carbon tax that increases Prometheus's supply costs by 80%. Prometheus invokes Clause 18 and proposes increasing the price to 85p per therm. Atlas refuses to negotiate, arguing 50p was the agreed price and Clause 18 is unenforceable as an agreement to agree. Prometheus threatens to cease supply. The current market rate for gas is 92p per therm. Atlas has no alternative supplier and its factory will close within two weeks without gas supply. Advise the parties, considering the enforceability of Clause 18, the obligation to negotiate in good faith, frustration, and the remedies available.

Critically assess the current law on contractual interpretation in English law following the Supreme Court decisions in Rainy Sky SA v Kookmin Bank (2011), Arnold v Britton (2015), and Wood v Capita Insurance Services Ltd (2017). Evaluate the tension between the textual approach favoured by Lord Neuberger in Arnold and the contextual approach advocated by Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society (1998). Consider the role of the 'natural and ordinary meaning' of words, the relevance of commercial common sense, and whether the current framework provides sufficient certainty for contracting parties. Discuss the exclusion of pre-contractual negotiations under the parol evidence rule and whether this exclusion is justified.

Quantum Computing Solutions Ltd ("QCS") enters into a research and development contract with UniTech Research Institute ("UniTech") to develop a prototype quantum processor. The contract price is £5 million, payable in stages. After QCS has paid £3 million and UniTech has completed approximately 60% of the work, the UK Government classifies quantum computing technology as a matter of national security and introduces the Quantum Technology Control Act 2024, which prohibits the transfer of quantum computing prototypes to private companies without a government licence. QCS applies for a licence but is refused on national security grounds. The contract contains no force majeure clause. QCS claims: (a) the contract is frustrated; (b) return of the £3 million paid; and (c) damages for wasted expenditure of £500,000 on preparing facilities to house the processor. UniTech counterclaims for the remaining £2 million, arguing it has incurred £4.2 million in costs. Advise the parties on frustration and the allocation of losses under the Law Reform (Frustrated Contracts) Act 1943.

Critically examine the law relating to duress in English contract law. Discuss the evolution from the narrow doctrine of duress to the person and goods to the broader concept of economic duress. Assess the requirements for a successful plea of economic duress, with particular reference to the concepts of illegitimate pressure and the absence of practical alternatives. Consider the significance of Pakistan International Airline Corporation v Times Travel (UK) Ltd (2021) in clarifying the boundaries of legitimate and illegitimate pressure in commercial negotiations. Evaluate whether the current law provides adequate protection against exploitative commercial behaviour while preserving the principle of freedom of contract.

Meridian Architecture Ltd contracts with Broadview Developments plc to design a 20-storey office building for £1.5 million. The contract includes Clause 22: "The Architect shall procure professional indemnity insurance of not less than £5 million for the duration of the project and for 12 years thereafter." Clause 25 provides: "The Architect's total aggregate liability under this contract shall not exceed the amount of professional indemnity insurance required under Clause 22." After the building is completed, structural defects in the design are discovered that will cost £8 million to rectify. Broadview's tenant, CoreBank plc, has to vacate the building during repairs, losing £2 million in business disruption. CoreBank's lease with Broadview contains a clause entitling CoreBank to claim losses from defective design against the building's architect directly. Meridian's PI insurance has lapsed due to non-payment of premiums. Advise: (a) Broadview on the enforceability of Clause 25 and the extent of Meridian's liability; (b) CoreBank on whether it can bring a claim directly against Meridian.