PDF SA unit 2 Contract Law.Jan 2011

PDF SA unit 2 Contract Law.Jan 2011 - LEVEL 6 UNIT 2...

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LEVEL 6 - UNIT 2 – CONTRACT LAW SUGGESTED ANSWERS - JANUARY 2011 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the January 2011 examinations. The suggested answers set out a response that a good (merit/distinction) candidate would have provided. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners’ reports which provide feedback on student performance in the examination. SECTION A Question 1 The doctrine of privity of contract means that a person who is not a party to a contract can neither sue nor be sued on the contract to which s/he is not a party. The doctrine has been regarded as a fundamental element of what constitutes a contract and contract law. It is closely connected with the requirement that, in simple contracts, a party seeking to sue must be able to show that s/he provided consideration: see Viscount Haldane LC’s comments in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915]. Justifications for the doctrine include, most importantly, freedom from the imposition of liability upon those who have not agreed to accept it. The injustice and social consequences of allowing A to agree with B to impose liability upon C under an agreement of which C is ignorant and has no interest, are obvious. Other justifications include the unfairness of allowing a person to obtain the benefit of an agreement when not providing consideration or allowing a person to sue on an agreement under which s/he cannot be sued. The doctrine has disadvantages. It frustrates the intentions of those with contractual rights who may wish to benefit a third party. In Tweddle v Atkinson (1861) the plaintiff’s father and father- in- law agreed with one another to each give the plaintiff a sum of money. The father-in-law died before paying the sum and the plaintiff sought payment from his executors. It was held that the plaintiff should fail: he had provided no consideration and was not privy to the contract. The doctrine prevents the enforcement of contracts for services agreed by others and already paid for: see (eg) Price v Easton (1833). It permits a party to accept the benefit of an agreement without performing its obligations: see Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd . Page 1 of 17
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Page 2 of 17 There have consequently been numerous interventions by the judiciary and parliament, seeking to avoid the doctrine or provide exceptions to it.
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