LLB Contract Law - Practice Paper 5

Opal Developments Ltd enters into a contract with Jasper Construction Ltd to build a luxury residential complex for £20 million, to be completed in 24 months. The contract incorporates the JCT Standard Building Contract 2016 with bespoke amendments. Clause 2.4 (as amended) provides: "The Contractor warrants that all materials used shall be of good quality and fit for their intended purpose. The Contractor shall be liable for any defects in materials for a period of 15 years from practical completion." After practical completion, serious defects emerge: (a) the cladding panels, sourced by Jasper from CladTech Supplies Ltd, contain a fire-resistant core that does not meet building regulations; (b) the underfloor heating system, installed by Jasper's subcontractor HeatWorks Ltd, is defective and causes water damage to 12 apartments; (c) the roof membrane, specified by Opal's own architect, fails prematurely because the architect specified an unsuitable product. The total remediation costs are £6 million. Opal seeks to recover the full amount from Jasper. Jasper argues it is not liable for the architect's specification error and seeks contribution from CladTech and HeatWorks. Consider issues of strict liability vs fault-based liability, the scope of Clause 2.4, the architect's specification, and Jasper's rights against its supply chain.

Critically assess whether English contract law adequately addresses the challenges posed by digital contracts, including smart contracts, click-wrap agreements, and contracts formed through automated systems. Consider how traditional doctrines of offer and acceptance, consideration, intention to create legal relations, and contractual capacity apply to these novel forms of agreement. Evaluate whether the Electronic Communications Act 2000 and existing case law provide a sufficient framework, or whether legislative reform is needed. Discuss the particular challenges of smart contracts executed on blockchain platforms, including the question of whether code can constitute a binding contract, the role of oracles, and the implications of immutability for doctrines of mistake, frustration, and remedies.

Professor Williams, a world-renowned chemist, enters into a consultancy agreement with PharmaCo Ltd. Clause 3 provides that Professor Williams will provide 'at least 20 hours per month of expert consultancy services' for 12 months at £10,000 per month. Clause 8 states: "This agreement may be terminated by either party on 3 months' written notice." Clause 11 provides: "Professor Williams shall not, during the term of this agreement or for 12 months after its termination, provide consultancy services to any pharmaceutical company competing with PharmaCo in the UK market." After 6 months, PharmaCo reduces Professor Williams's monthly fee to £6,000 without her consent, citing budget constraints. Professor Williams continues to work for two more months under protest before writing to PharmaCo that she considers herself released from the agreement. She immediately begins consulting for GenBio Ltd, a direct competitor. PharmaCo seeks to enforce the restrictive covenant against Professor Williams. Professor Williams counterclaims for the unpaid £8,000 (£4,000 x 2 months). Advise both parties on: (a) whether PharmaCo's unilateral fee reduction constitutes a repudiatory breach; (b) whether Professor Williams's continued performance amounts to affirmation; (c) the enforceability of the restrictive covenant in these circumstances.

Critically analyse the remedy of account of profits in the context of breach of contract following the Supreme Court decision in Morris-Garner v One Step (Support) Ltd (2018). Evaluate how this decision interacts with the earlier authority of Attorney General v Blake (2001) and the negotiating damages concept developed from Wrotham Park Estate Co v Parkside Homes Ltd (1974). Consider the circumstances in which a claimant may recover gains-based relief rather than compensatory damages, and assess whether the current framework provides a coherent and principled approach to remedies for breach of contract. Discuss whether the law has moved too far or not far enough from the traditional compensatory principle.

NovaTech Solutions Ltd develops artificial intelligence systems. It enters into a joint venture agreement with DataVault Corp to develop an AI-powered fraud detection system for the banking sector. The agreement provides for equal profit sharing and contains the following clauses: Clause 4: "Each party shall contribute its best available technical resources to the project." Clause 9: "Neither party shall develop or participate in any competing fraud detection product during the term of this agreement or for 18 months thereafter." Clause 14: "All intellectual property developed under this agreement shall be jointly owned." Clause 17: "Any dispute arising under this agreement shall first be submitted to mediation. If mediation fails, the dispute shall be resolved by arbitration under LCIA rules." After 12 months, NovaTech discovers that DataVault has been secretly developing a rival AI fraud system using algorithms originally developed for the joint venture. DataVault has also licensed some of the joint venture's IP to ThirdParty Bank without NovaTech's knowledge. NovaTech wishes to terminate the agreement, claim damages, and prevent further misuse of the IP. However, NovaTech is concerned that Clause 17 prevents it from obtaining urgent injunctive relief. Advise NovaTech on breach, remedies, the scope of the arbitration clause, and the availability of interim relief.