LLB Contract Law - Practice Paper 1

The law of contract is said to be underpinned by the principle of freedom of contract. Critically assess the extent to which modern English contract law gives effect to this principle. Consider how legislative intervention, particularly through the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015, has limited parties' freedom to determine their own contractual terms. Evaluate whether such intervention is justified in addressing inequality of bargaining power and whether the balance between freedom and fairness has been appropriately struck. Reference should be made to George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd (1983) and the Supreme Court decision in Cavendish Square Holding BV v Makdessi (2015).

Alice places an advertisement in a trade magazine: "For sale: Rare 1967 Ferrari 275 GTB. £500,000 or nearest offer. Serious enquiries only." Ben telephones Alice and offers £480,000. Alice says she will "consider it over the weekend." On Saturday, Charlie visits Alice and offers £520,000. Alice shakes hands with Charlie and says "It's a deal." Charlie says he will arrange payment on Monday. On Sunday, Alice decides she prefers Ben's offer because Ben is a friend. She telephones Charlie and says: "I've changed my mind, I'm selling to Ben." On Monday morning, Ben sends Alice a cheque for £480,000 before hearing about Charlie's offer. Alice banks the cheque. Charlie arrives at Alice's house on Monday afternoon with a banker's draft for £520,000 and discovers the car has been sold to Ben. Advise Charlie on whether he has a binding contract with Alice and what remedies may be available to him.

Horizon Shipping Ltd charters a vessel from Neptune Maritime plc for a 12-month period at £50,000 per month to transport goods between Southampton and Rotterdam. Clause 8 of the charterparty provides: "The charterer shall redeliver the vessel in good order and condition, ordinary wear and tear excepted, no later than the last day of the charter period." Clause 9 states: "In the event of late redelivery, the charterer shall pay an additional sum equivalent to twice the monthly charter rate for each month or part thereof of overrun." Due to unexpected port congestion in Rotterdam, Horizon is unable to redeliver the vessel until six weeks after the charter period expires. Neptune claims £150,000 under Clause 9 (being twice the charter rate for two months). During the overrun period, the market rate for similar vessels has fallen to £35,000 per month. Horizon argues that Clause 9 is an unenforceable penalty and that Neptune's actual loss is only £52,500 (6 weeks at £35,000/month). Advise the parties on the enforceability of Clause 9.

Analyse the doctrine of common mistake in English contract law and assess its current scope following the decisions in Bell v Lever Brothers Ltd (1932) and Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (2002). Consider whether the doctrine provides adequate relief for parties who contract under a shared fundamental misapprehension, and evaluate the relationship between the common law doctrine and the former equitable jurisdiction recognised in Solle v Butcher (1950). Discuss whether the abolition of the equitable doctrine in Great Peace has left a gap in the law that should be addressed.

Gemma runs a bakery business. She contracts with WheatSupply Ltd to purchase 50 tonnes of premium organic flour at £800 per tonne (total £40,000), delivery in monthly instalments of 10 tonnes over five months. The first two deliveries are satisfactory. The third delivery contains flour contaminated with traces of a non-organic pesticide. Gemma uses some of this flour before discovering the contamination and bakes 200 cakes which she sells to her customers. Several customers become ill (though not seriously) and Gemma receives numerous complaints. She loses 15 regular customers who take their business to a rival bakery. Gemma also had a contract to supply 500 specialty cakes for a local festival at £20 per cake (£10,000), but the festival organisers cancel the order after hearing about the contamination. Gemma seeks to: (i) reject all remaining deliveries; (ii) claim damages for the contaminated flour; (iii) recover lost profits from the festival contract; and (iv) recover the value of the 15 lost customers. Advise Gemma.