GDL Contract Law - Paper 3

NovaTech Ltd contracts with DataStream plc for the installation of a bespoke IT system for £500,000. The contract contains a liquidated damages clause of £5,000 per day of delay and a clause limiting DataStream's total liability to £250,000. DataStream subcontracts the hardware installation to CircuitWorks Ltd. The system is delivered three weeks late due to CircuitWorks' incompetence. The system also contains a critical software bug that causes NovaTech to lose client data worth £800,000 in lost business. NovaTech had specifically informed DataStream of the importance of data security during negotiations. DataStream argues: (i) the liquidated damages clause limits recovery for delay; (ii) the limitation clause caps total liability; and (iii) CircuitWorks is responsible for the hardware issues. Advise NovaTech, considering the enforceability of both clauses and the privity issues.

The doctrine of frustration is too narrow in its application and too draconian in its effects. Critically evaluate this statement with reference to the development of the doctrine from Taylor v Caldwell (1863) to the present day, the operation of the Law Reform (Frustrated Contracts) Act 1943, and the relationship between frustration and force majeure clauses. Consider whether the doctrine adequately addresses modern commercial realities including pandemics and climate-related events.

Priya, a fashion designer, agrees to create a bespoke wedding dress for Qian for £8,000, to be completed by 1 May. The contract is oral. After Priya begins work, Qian emails her a document titled "Additional Terms" which includes: (i) a right to cancel within 14 days of delivery; (ii) a term that all intellectual property in the design belongs to Qian; and (iii) a clause requiring disputes to be resolved by arbitration. Priya does not respond to the email but continues working. The completed dress has a minor stitching defect. Qian refuses to pay and invokes the cancellation clause. She also commissions another designer to reproduce the dress design for her bridesmaids. Advise Priya on whether the Additional Terms were incorporated, whether she can recover payment, and her intellectual property position.

Critically evaluate the remedies for breach of contract, with particular focus on the tension between the compensatory principle and the availability of specific performance. Consider the decision in Morris-Garner v One Step (Support) Ltd (2019) on Wrotham Park damages, the Supreme Court's approach to account of profits in Attorney General v Blake (2001), and whether English law adequately addresses cases where damages are an inadequate remedy. Should specific performance be more readily available?

Raj enters into a contract to buy a house from Sara for £450,000, exchanging contracts on 1 March with completion on 1 April. On 15 March, Sara discovers that the house has a serious structural defect that will cost £80,000 to repair. Sara does not disclose this to Raj. On 1 April, completion takes place and Raj discovers the defect the following week. Raj also discovers that Sara had obtained a survey six months earlier identifying the defect. The contract contains a clause stating: "The buyer purchases the property having satisfied himself as to its condition and the seller makes no representations as to its state of repair." Raj seeks to rescind the contract or claim damages. Meanwhile, Raj's mortgage lender, BigBank plc, claims it would not have advanced the mortgage had the defect been known. Advise Raj and BigBank on their legal positions.