Advanced Contract Law Flashcards

What is the 'Interfoto' principle on incorporation of onerous terms?

Answer: A particularly onerous or unusual clause must be fairly and reasonably brought to the attention of the other party or it will not be incorporated

In Interfoto Picture Library v Stiletto Visual Programmes [1989] QB 433, the Court of Appeal held that a particularly onerous or unusual clause will not be incorporated by general notice — sufficiently explicit steps must be taken to draw it to the other party's attention.

What is the significance of Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] for remoteness?

Answer: The parties' assumed responsibility for a type of loss at the time of contracting, not just foreseeability, determines recoverability

In The Achilleas [2008] UKHL 48, the House of Lords (Lord Hoffmann and Lord Hope) introduced an 'assumption of responsibility' gloss to Hadley v Baxendale — the question is whether the defendant had assumed responsibility for the type of loss in the context of the contract.

What is the doctrine of 'frustration by supervening illegality'?

Answer: Where performance of the contract becomes illegal after formation due to a change in the law, the contract is frustrated

Frustration by supervening illegality arises where a change in the law after contract formation makes performance unlawful. The contract is discharged, with the Law Reform (Frustrated Contracts) Act 1943 governing the financial consequences.

What did Robinson v PE Jones (Contractors) Ltd [2011] EWCA Civ 9 decide about concurrent liability in contract and tort?

Answer: A building contractor owes no duty in tort to their employer (as opposed to a third party) in respect of pure economic loss arising from defective work where the only loss is to the building itself

In Robinson v PE Jones, the Court of Appeal held that a building contractor owes no Hedley Byrne duty in tort to the employer for pure economic loss from defective work — the Defective Premises Act 1972 and contract law provide the appropriate remedies.

What is the rule in Hadley v Baxendale [1854] and how does it limit damages?

Answer: Only losses arising naturally or in the reasonable contemplation of the parties as a probable consequence of breach at the time of contracting are recoverable

The rule in Hadley v Baxendale [1854] 9 Exch 341 provides two limbs: (1) losses arising naturally from the breach, and (2) losses within the reasonable contemplation of both parties at the time of contracting. Both limit recovery by excluding unforeseeable losses.

What is 'gain-based' damages in contract law and when might they be awarded?

Answer: Damages measured by the defendant's gain rather than the claimant's loss, available in exceptional cases involving cynical breach where compensatory damages would be inadequate (Attorney General v Blake [2001])

In AG v Blake [2001] AC 268, the House of Lords held that in exceptional cases (here, breach of a contract with the Crown by a spy), an account of profits may be ordered in contract. The remedy is discretionary and available only where compensatory damages would be inadequate.