Keenan and Riches’BUSINESS LAW

Chapter 7Introduction to the law of contract

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1 Make a list of all the agreements you made

(a) today, and (b) yesterday. Identify which

agreements are contracts and explain why they

are legally binding.

2 Are these statements true or false?

(a)Most of the law of contract can be found in

Acts of Parliament.

(b)All contracts must be in writing.

(c)Conveyances of land must be in the form of

a speciality contract.

(d)The absence of an essential element will always

render a contract void.

3 Analyse the following transactions in terms of offer

and acceptance:

(a)filling a job vacancy;

(b)parking a car in a multi-storey car park;

(c)taking a bus ride;

(d)buying a cup of coffee from an automatic

vending machine;

(e)buying a packet of soap powder from a

supermarket;

(f) buying an antique dresser at an auction;

(g)acquiring shares in a privatisation issue;

(h)buying a book via the Internet.

4 On 13 September, Fiona, a newly qualified

dentist, receives the following note from her

uncle:

10 Park Street

LONDON

Wl A54

Dear Fiona

We talked some time ago about your buying some

of my dental equipment when I retire from my London

practice at the end of this month. I am prepared to let

you have everything for £15,000. Let me know fairly

quickly if you’re interested because I’ve already had

a very good offer from one of my colleagues.

Your affectionate uncle

Arnold

Self-test questions/activities

Where no time limit is agreed between the parties, the
Limitation Act 1980 will apply. The Act imposes stat-
utory time limits within which an action for breach of
contract must be brought. They are:

1 an action on a simple contract must be brought within

six years of the date when the cause of action accrued;

2 an action on a contract made in the form of a deed

will be statute barred after 12 years from the date

when the cause of action accrued.

These time limits may be extended as follows:

(a) where fraud or mistake is alleged, time does not

start to run until ‘the claimant has discovered the

fraud, concealment or mistake or could with rea-

sonable diligence have discovered it’;

(b) if the claimant is under a disability, such as minor-

ity or mental incapacity, the time limits do not start

to operate until the disability is removed, e.g. in the

case of a minor on reaching 18;

(c) where the claim is for a debt or a liquidated sum,

and the defendant acknowledges the claim or makes

part-payment, time will run from the date of

acknowledgement or part-payment.

The rules about limitation of actions do not apply

to the equitable remedies. Nevertheless, the equitable

maxim of ‘delay defeats equity’ will apply to defeat a

claimant who waits too long before taking legal action.

International Freight Association (BIFA) standard terms

and conditions which required any legal action to be

brought within nine months. GOC claimed that the paint

had been damaged in transit and brought proceedings

for breach of contract more than a year after the nine-

month time limit expired. GOC argued that the time bar

was void for unreasonableness under the Unfair Contract

Terms Act 1977 (this Act will be discussed in more detail

in Chapter 9 ). The Court of Appeal held that the clause

was not void under the Act. The parties were both in

business, they were of equal bargaining strength and GOC

might have been able to contract on different terms.

Moreover, the clause had been brought to GOC’s atten-

tion. It was reasonably practicable for GOC to comply

with the nine-month time limit as the goods could have

been checked on delivery. The clause was effective to

bar GOC’s claim.