CILEx L6 Advanced Contract Law

Question 1

What did the Supreme Court decide in Marks & Spencer plc v BNP Paribas Securities Services [2015] regarding implied terms?

Accepted Answer

The traditional two tests (business efficacy and officious bystander) remain the correct approach; a term is not implied merely because it is reasonable

Answer

In Marks & Spencer v BNP Paribas [2015] UKSC 72, the Supreme Court reaffirmed that terms are implied only where the two traditional tests are satisfied (business efficacy or the officious bystander test), and rejected any broader 'reasonable expectations' approach.

Question 2

What is the significance of Arnold v Britton [2015] UKSC 36 for contractual interpretation?

Accepted Answer

Courts must give words their natural meaning; commercial common sense does not allow courts to rewrite clear contractual language

Answer

In Arnold v Britton, the Supreme Court (Lord Neuberger) emphasised that the starting point is the natural and ordinary meaning of the words. Commercial common sense cannot justify departing from clear language, even if the result proves commercially disadvantageous.

Question 3

What is the Achilles rule from Bain v Fothergill [1874] and has it been abolished?

Accepted Answer

It limited a buyer's damages for a seller's failure to show good title to land to expenses only (not loss of bargain); abolished by s.3 Law of Property (Miscellaneous Provisions) Act 1989

Answer

The rule in Bain v Fothergill limited damages for failure to make good title to land to recovery of expenses, not loss of bargain. It was abolished by s.3 Law of Property (Miscellaneous Provisions) Act 1989 — since then, ordinary principles of damages apply.

Question 4

What is the approach to penalty clauses following Cavendish Square Holding BV v Makdessi [2015]?

Accepted Answer

A clause is a penalty only if it is extravagant and unconscionable in comparison with the legitimate interests of the innocent party; the genuine pre-estimate test is no longer the sole test

Answer

In Cavendish Square [2015] UKSC 67, the Supreme Court replaced the simple 'genuine pre-estimate of loss' test with a broader test: is the clause a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate business interest of the innocent party?

Question 5

What is 'economic duress' in contract law and what test applies?

Accepted Answer

Illegitimate pressure that caused the claimant to contract, where the pressure went to the nature of the act (not merely the circumstances), assessed objectively

Answer

Economic duress (DSND Subsea v Petroleum Geo-Services [2000]; Pakistan International Airline Corporation v Times Travel [2021] UKSC 40) requires: (1) illegitimate pressure, (2) that was a significant cause inducing the contract, and (3) that the victim had no practical choice.

CILEx Level 6 Practice Test

CILEx Level 6 Practice Test

CILEx L6 Advanced Contract Law