Law for Accountants- Contract Law

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  • Created by: ElishaG
  • Created on: 10-01-20 21:55
What is the definition of contract?
A legally binding agreement formed by the mutual consent of the parties.
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What are key elements of a contract?
1)Agreement- offer and acceptance. 2)Consideration. 3)Intention.
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What are other factors affecting the validity of a contract?
1)Capacity. 2)Genuine consent. 3)Form. 4)Content. 5)Legality.
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Why is capacity needed to form a contract?
Must understand contract- examples of incapacity- intoxicated, age, mental health issues.
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Why is genuine consent needed to form a contract?
Can't be a minor, under duress, under influence. Duress makes contract voidable.
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Why is form needed to form a contract?
Some contracts must be written, i.e. bills of exchange, cheques, sale of land etc. Some may need witnesses, i.e. deeds.
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Why is content needed to form a contract?
Some things not enforceable in contracts. Unfair contract terms act 1977, can't exclude liability for death/personal injury through negligence.
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Why is legality needed to form a contract?
Can't have contract for illegal purposes. Pearce v Brooks 1866.
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What happened in Pearce v Brooks 1866?
Facts- prostitute enters into a contract with a carriage company to provide a carriage for her work. She doesn't pay, so carriage company tries to recover the cost. Held-Carriage company knew she was a prostitute, so cannot recover damages.
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What is an offer?
An expression of willingness to be bound on specific terms.
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What are the clarity of terms for an offer?
1)Terms must be clearly defined. 2)Must not be vague. 3)Must be capable of acceptance.
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What is an invitation to treat?
An indication that a party is prepared to receive offers with a view to entering into a binding contract.
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What are examples of an invitation to treat?
1)Items on shop shelves.2)Items in shop windows. 3)Most adverts in newspapers. 4)Auctions. 5)Mail order catalogues. 6)Company prospectuses. 7)Invitation for tenders.
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Which cases relate to advertisements in a newspaper?
Partridge v Crittenden 1968 and Carlil v Carbolic Smoke Ball Company 1893.
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What happened in Partridge v Crittenden 1968?
Facts-Defendant put advert in newspaper for Bramble-finch birds- offense to sell birds under Protection of Birds Act. Held-Advert was invitation to treat not offer. So defendant not in contravention of act.
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What happened in Carlil v Carbolic Smoke Ball Company 1893?
Facts-manufactures of smoke ball said anyone who used ball and got influenza would be given £100. Carlil used it and got influenza,company said no contract as she never notified them that she accepted. Held-wording of advert
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Which case relates to shop window displays?
Fisher v Bell 1961.
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What happened in Fisher v Bell 1961?
Facts-Offence to "offer for sale" offensive weapons. Shop-keeper had flick knives with price tag in shop window. Held-display of knives was invitation to treat and customer made offer to buy. Shopkeeper not acting illegally.
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Which case relates to goods on shop shelves?
Boots v Pharmaceutical Society of GB 1953.
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What happened in Boots v Pharmaceutical Society of GB 1953?
Facts-statute required sale of some pharmaceuticals must be supervised by pharmacist.Boots had store with self service drugs-customers paid at cash desk.Pharmacist at cash desk but not at shelves.Pharmaceutical society-statute being contravened.
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What was held from Boots v Pharmaceutical Society of GB 1953?
Held-Display of goods in shop is invitiation to treat, not offer. Customer made offer and Boots could accept or decline offer. Ringing up price on till is when binding contract made.
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What is a tender?
Tender arises when party issues statement asking interested parties to submit terms on which they are willing to carry out work or supply goods. Inviting tender=invitation to treat. Submitting tender is an offer.
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What are 2 examples of tenders used that are not an offer (use case names)?
1)Mere statement of selling price in response to request for information (Harvey v Facey 1893). 2)Mere statement of intention to sell is not an offer. Harris v Nickerson 1873.
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What happened in Harvey v Facey 1893?
Facts-defendant selling his store. Claimant sent telegram asking for lowest cash price. Defendant replied £900.Claimant agreed to buy.Defendant refused to sell and Claimant sued and tried to get injunction to prevent new buyer taking property.
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What was held in Harvey v Facey 1893?
Held-Defendant didn't make affirmative answer regarding willingness to sell. Defendants response to query was a statement of information- no offer or acceptance.
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What happened in Harris v Nickerson 1873?
Facts-Defendant advertised that some furniture would be going to auction.Claimant obtained commission to buy furniture, travelled to auction, but lots for furniture withdrawn.Claimant sued for loss of time and expense.Held-Advert wasn't an offer.
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What is a cross offer?
When two parties make identical or similar offers to each other without knowing about the other persons offer. No binding contract made as nobody has accepted the offer made by the other.
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How can an offer be terminated?
1)Rejection.2)Counter-offer.3)Conditional acceptance.4)Revocation.5)Lapse of time.
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What is rejection?
By saying no, if they change their mind then they've made a new offer.
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What is a counter-offer?What are the cases?
Counter-offer is an offer made in response to an offer. Hyde v Wrench 1840. Stevenson v McLean 1880.
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What happened in Hyde v Wrench 1840?
Facts-Wrench offered farm for £1000 to Hyde. Hyde made counter-offer of £950, Wrench rejected. Later Hyde said accept £1000 offer,Wrench rejected offer.Held-Hyde couldn't accept original offer-it was terminated when counter offer made.
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What happened in Stevenson v McLean 1880?
Facts-M offered (writing) to sell iron to S at given price. S quieried delivery times but before receiving reply sent letter of acceptance. Acceptance crossed in post as M sent revocation letter. M refused to supply iron argued S's query was counter
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What held in Stevenson v McLean 1880?
M could not treat query as counter offer.M's offer was still open when S wrote letter accepting it.
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What is conditional acceptance?What are the cases?
Example would be accepting offer, but paying it in installments. Neale v Merrett 1930.
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What happened in Neale v Merrett 1930?
Facts-Defendant made offer to sell land to plantiff for £280.Plaintiff replied by sending £80 in envelope,promised to pay in monthly instalments. Held-Deferred payments was not agreed in contract terms. No acceptance.
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What is revocation?What are the cases?
Revocation by offeror can be made any time before accpetance, even if offeror agreed to keep offer open.Routledge v Grant 1828. Byme v Leon Van Tienhoven 1880. Dickinson v Dodds 1876. Errington v Errington 1952.
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What happened in Routledge v Grant 1828?
Facts-G offered to buy R's house and stated offer would be open for 6 weeks, but withdrew offer before 6 weeks.Held-G entitled to withdraw offer before acceptance. Revocation must be communicated to offeree.
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What happened in Byme v Leon Van Tienhoven 1880?
Facts-offer posted 01/10,reached claimant on 11/10. Claimant cabled acceptance but defendant posted letter of revocation on 08/10.Letter received after acceptance.Held-Contract binding as revocation not communicated prior to acceptance.
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What is lapse of time?What are the cases?
Offer will lapse on:death of offeror,death of offeree,failure of condition,expiry of fixed time or after reasonable time. Ramsgate Victoria Hotel v Montefiore 1866.
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What happened in Ramsgate Victoria Hotel v Montefiore 1866?
Facts-Defendant applied to buy company shares in June and paid deposit.Company only accepted it in November.Defendant had changed mind and didn't want shares.Held-Offer deemed to have lapsed.Defendant not bound to buy shares as value can change a lot
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What is acceptance?
An unconditional assent to all terms of an offer.
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What is the general rule for acceptance?
Acceptance is not effective until actually communicated to offeror.
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What is the postal rule?What are the cases?
Exception to rule that acceptance must be communicated. Postal rule states that acceptance is complete as soon as letter is posted.Adams v Lindsell 1818. Household Fire Insurance v Grant 1879.
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What happened in Adams v Lindsell 1818?
Facts-02/09,defendants offered to sell claimants wool,required answer by post.Acceptance letter only recieved on 09/09. so wool was sold to somebody else.Held-Offer accepted as soon as letter had been posted, defendant in breach of contract.
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What happened in Household Fire Insurance v Grant 1879?
Facts-G applied for shares in HFI, HFI posted share allotment letter to G but letter never received.Held-Once letter posted, HFI cannot recall it, they'd accepted G's offer.
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What are the conditions of the postal rule?
Letter must be properly stamped and addressed. Letter must actually be posted.
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What is consideration?
The element of value within the contract, it may be an act or a forbearance (suffering a detriment).
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What can consideration be?
1)Executed-done at time contract is made. 2)Executory- exchange of promises to perform in future.
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What must consideration not be?
Past (Re McArdle 1951). As it is insufficient and thus not valid.
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What happened in Re McArdle (1951)?
Facts-Mother and 3 grown children lived together. 1 son and wife did decorating and later other 2 kids promised to pay towards costs and signed document.Held-Promise unenforceable as work had been done-past consideration.
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What are rules of consideration?
1)consideration must move from both parties to the agreement-exception agreement by deed-signed, sealed, delivered. 2)Consideration must be sufficient (some value) but need not be adequate (fair value). Thomas v Thomas 1842
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What happened in Thomas v Thomas 1842?
Facts-husband wanted wife to inherit house-no will.Executors agreed she could have house for £1 a year rent. Execs refused to through.Held-Consideration was sufficient, but not adequate, so no claim.
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What are examples of insufficient consideration?
1)Performance of existing contractual obligation,2)Performance of an existing statutory obligation.3)Part payment of a debt.
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What case is related to Performance of existing contractual obligation?
Stilk vMyrick 1809.
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What happened in Stilk v Myrick 1809?
Facts-captain promised share of wages of deserting seamen with rest of crew who had contracted to sail ship home.Held-promise not binding as no extra consideration fro seamen-doing what they were contracted to do.
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What case is related to Performance of an existing statutory obligation?
Collins v Godefroy 1831.
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What happened in Collins v Godefroy 1831?
Facts-witness promised payment if he attended court to give evidence.Held-did not amount to consideration as legally required to attend court.
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What are 3 exceptions to performance of an existing statutory duty (poesd) is not sufficient?
1)if existing contractual or statutory duty is exceeded.2)performance of existing contractual duty may be sufficient if it confers benefit to other party.3)Poeco sufficient to support promise of third party.4)Part payment
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What cases relate to if existing contractual or statutory duty is exceeded?
Glasbrook Bros Ltd v Glamorgan County Council 1925. and Hartley v Ponsonby 1857.
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What happened in Glasbrook Bros Ltd v Glamorgan County Council 1925?
Facts-Glasbrook Bros requested police to provide protection in excess of statutory requirement. Held-police provided sufficient consideration by providing extra officers over and above statutory requirement.
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What happened in Hartley v Ponsonby 1857?
Facts-High number of desertions from ship-undermanned. Extra pay offered to crew if they stayed loyal and sailed ship home.Held-Promise of extra money recoverable as situation more dangerous as undermanned.
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What cases relate to performance of existing contractual duty may be sufficient if it confers benefit to other party?
Williams v Roffey Bros 1990?
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What happened in Williams v Roffey Bros 1990?
Facts-W agreed to do carpentry in flats for R at £20000 by agreed date.Time penalty clause, R agreed to pay £10000 to ensure job done on time.Held-£100000 new contract that benefited both parties.
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What cases relate to Poeco sufficient to support promise of third party?
Shadwell v Shadwell 1860.
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What happened in Shadwell v Shadwell 1860?
facts-claimant engaged to E. Claimants uncle promised to pay £150 a year until certain salary reached.Uncle died and claimant tried to recover outstanding amount.Held-sufficient consideration.Contract between claimant and E, uncle was 3rd party.
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How do illegal acts affect consideration?
Illegal act is insufficient to amount to consideration.
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What is an example of a problem with part-payment?
If A accepts £400 settlement from B as settlement for £500 debt, can A sue for £100 left.
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What is the general rule for part-payment?
Rule in Pinnels case 1602 states payment of smaller sum doesn't discharge debt of greater amount.
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What are the 4 exceptions to Pinnels case?
1)When part payment made by third party.2)Composition with creditors.3/4)Accord and satisfaction.
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What does accord mean?
Both parties agree freely to part payment?
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What does satisfaction mean?
Satisfaction might be payment at an earlier date, payment at a different place, payment in different currency etc.
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What case relates to part-payment?
D & C Builders v Rees 1966.
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What happened in D & C Builders v Rees 1966?
Facts-R owed money to D&C, D&C in financial difficulty, so R offered to pay smaller sum or nothing at all.Claimant accepted sum but then sued for balance.Held-Claimant could sue for balance as R pressured D&C, who were reluctant.Promissory estoppel.
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What is promissory Estoppel?
Doctrine of promissory Estoppel based on principles of fairness and justice.Prevents person going back on promise to accept lesser amount.
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When was the principle established?
Central London property trust v High trees house 1947.
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What happened in Central London property trust v High trees house 1947?
Facts-Claimants let block of flats to defendant in 1937 for £2500 pa rent.Defendant intended to sublet flats, after WW2 bombing, some flats impossible to rent out.Existing tenants had rent reduced.Claimants accepted 1/2 of rent for rest of war.
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What was held from Central London property trust v High trees house 1947?
Held-Full rent payable from end of war.Promissory Estopel prevented claimant from recovering rent forgone in war.High trees house expected to reduce rent as central london housing reduced rent.
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What are the conditions of the Promissory estopel principle?
1)must be existing contract between parties.2)Claimants must voluntarily waive rights under contract.3)Must be intention that defendants should rely on waiver. 4)Defendants must alter legal position because of waiver.
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What are limitations of the doctrine?
1)It's a defence not cause of action.2)May only have suspensory effect.3)Party seeking to use as an equitable defence must have acted fairly.
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What is privity of contract?
Consideration must move from the promissee. Only a party to a contract has enforceable rights or obligations under the agreement.
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What is the general rule of privity of contract?
Only parties to a contract acquire rights and obligations under it. Can sue and be sued on it.
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What are some exceptions to this general rule?
1)contracts Act 1999 allows person that's not a party to contract to enforce it as long as contract for their benefit.2)Contract between 2 parties may be accompanied by collateral contract between 1 of parties and 3rd person relating to same subject
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Which case is an example of collateral?
Shanklin Pier v Detel Products 1951.
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What happened in Shanklin Pier v Detel Products 1951?
Facts-Detel told SP that paint would last 7-10 years.Claimant employed contractors to paint pier, but began flaking after 3 months.Claimant sued detel.Held-collateral contract between SP and D as D said paint would last 7-10 years.
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Why is intention an important part of a contract?
Agreement is only legally binding if parties intend it to be. Strongly presumed in business agreements but not presumed if agreement is of social or domestic nature.
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What cases can be used for domestic and social agreements/
Balfour v Balfour 1919. Merritt v Merritt 1970. Simpkins v Pays 1955.
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What happened in Balfour v Balfour 1919?
Facts-defendant promised to pay wife £30/month if she supported herself whilst he was abroad. Held-no legally binding contract as it was a domestic agreement.
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What happened in Merritt v Merritt 1970?
Facts-Separated husband and wife, husband signed document. If wife payed off mortgage on home then he would transfer his ownership to her. Wife paid mortgage, husband refused to transfer ownership and argued it was a domestic agreement.
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What was held in Merritt v Merritt 1970?
Held-Husband's promise enforceable as they were separated-rebuted the presumption
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What happened in Simpkins v Pays 1955?
Facts-Pays, granddaughter and Simpkins all entered fashion competition each week , all costs shared equally. Won £750, Pays received money and Simpkins claimed 1/3.Held-Legally enforceable as intention to create legal relations.
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What is a case used in commercial context?
Edwards v Skywards 1964.
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What happened in Edwards v Skywards 1964?
Facts-Claimant was pilot working for defendant about to be made redundant. efendants said that if he withdrew contributions to company pension fund, they would pay equivalent company contributions.Pilot agreed but then company changed mind.
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What was held in Edwards v Skywards 1964?
Held-Strongly presumed to be legally binding. claimant could therefore enforce the agreement and was entitled to the money.
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What is a letter of comfort?
Used in international contracts to assure contracting party that parent company will provide its subsidiary with necessary resources to fulfill contract. But has no legal effect.
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What are terms of a contract?
A term is an integral part of a contract.
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What is a representation?
A representation is not an integral part of a contract. It's something said to the offereor to induce the offeree to enter into the contract.
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What will court consider?
1)Timing.2)Importance attached to the statements. 3)Expertise of party making statement.
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What is a condition? What case relates to conditions?
1)Term that's fundamental to contract.2)Innocent party entitled to repudiate contract & claim damages. Poussard v Spiers 1876.
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What happened in Poussard v Spiers 1876?
Facts-Poussard entered contract to perform as opera singer for 3 months.Fell ill 5 days before opening night and not able to perform. Spiers replaced her.Held-Poussard in breach so Spiers entitled to end contracts.
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What is a warranty?What case relates to warranties?
1)Less important term, that's incidental to main purpose of contract.2)Innocent party only entitled to claim damages. Bettini v Gye 1876.
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What happened in Bettini v Gye 1876?
Facts-Bettini hired to be opera singer for 3 months, fell ill and didn't attend rehearsal.Employer sacked and replaced him.Held-Breach of warranty so employer couldn't end contract.Rehearsal not root of contract.
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What is an innominate term?
When it is not possible to determine whether a term is a condition or warranty.
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What happens if innominate terms are breached?
Depends on degree of breach. Trivial-damages only. Serious-damages and/or repudiation.
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What case relates to innominate terms?
Hong Kong Fir Shipping Co v Kawasaki Kisa Kaisha Ltd 1962.
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What happened in Hong Kong Fir Shipping Co v Kawasaki Kisa Kaisha Ltd 1962?
Facts-Ship chartered for 2 yrs.Agreed ship would be seaworthy whole time.But 20 weeks it wasn't.Defendants ended contract-treated as breach of condition. Held-Defendant not entitled to end contract as 20weeks out of 2 years isn't substantial.
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What can contractual terms be?
Expressed or implied.
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What are examples of implied terms and cases for them?
1)Implied by custom- Les Affreteurs v Walford 1919.2)Implied to give efficacy to contract- The Moorcock 1889.3)Implied by statute-Ucta and CRA.
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What happened in Les Affreteurs v Walford 1919?
Facts-Walford charged commission to charter ship from Les Affreteurs. Ship repurposed for war, so Les Affreteurs refused to pay commission. Held-Les Affretuers had to pay commission.
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What happened in The Moorcock 1889 Case?
Facts-Wharf owner agreed to let owner unload ship at wharf. Ship grounded at low tide and damaged.Held-implied term that ground at wharf was safe at low tide as both parties knew ship must rest on it.
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What is an exclusion clause?
An attempt to exclude liability in whole or in part for breach of contract (or negligence)
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What are case law principle?
1)Timing.2)Incorporation.3)Signed contracts.4)Oral assertions.5)Fundamental breach.6)Incorporated through a course of dealings.
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Which case relates to Timing?
Olley v Marlborough court 1949 and Thornton v Shoe Lane Parking Ltd 1971.
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What happened in Olley v Marlborough Court 1949?
Facts-Contract made at hotel reception desk.Exclusion clause on back of hotel room door.Claimant had coat stolen.Held-Contract made before exclusion clause shown. So clause ineffective.
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What happened in Thornton v Shoe Lane Parking Ltd 1971?
Facts-Claiant injured on car park due to negligence, exclusion clause on back of ticket.Held-contract was formed when ticket dispensed from machine- exclusion clause too late.
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Which case related to incorporation?
Chapelton v Barry UDC 1940.
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What happened in Chapelton v Barry UDC 1940?
Facts-Claimant hired deckchair, which collapsed resulting in injury.Exclusion clause was on back of ticket.Held-Ticket was essentially receipt, so not incorporated into the contract.
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Which case relates to signed contracts?
L'Estrange v Gracoub 1934.
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What happened in L'Estrange v Gracoub 1934?
Facts-Claimant purchased vending machine and signed under exclusion clause.Machine broken and claimant tried to reject it.Held-By signing order form, she was bound to terms of exclusion clause whether she'd read it or not.
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Which case relates to oral assertions?
Curtis v Chemical Cleaning Co 1951.
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What happened in Curtis v Chemical Cleaning Co 1951?
Facts-Claimant took wedding dress to be clean, asked to sign form and told it excluded liability for damage to beading. Form had clause excluding liability for any damage, dress was returned stained.Held-Employee misrepresented the clause.
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Which case relates to fundamental breach?
Photo Production v Securicor Transport 1980
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What happened in Photo Production v Securicor Transport 1980?
Facts-security burned down factory he was guarding. Contract limited employers' liability for injurious acts and defaults of guards.Held-clause clear and limited liability for breach.
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Which case relates to Incorporated through a course of dealings?
Hollier v Rambler Motors 1972.
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What happened in Hollier v Rambler Motors 1972?
Facts-claimant used services of defendant garage multiple times over few years.Always signed exemption clause, but on one occasion, contract made over phone with no exemption clause mentioned.Garage damaged car during repair work.Held-Garage liable
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What are the statutory rules?
1)Unfair contract terms act 1977. 2)Consumer Right Act 2015.
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What does the UCTA 1977 apply to?
Exclusion clauses in business to business contracts.
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What does UCTA 1977 state about excluding liability for death or personal injury?
If it's due to negligence, it is void.
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What does UCTA 1977 say about other loss due to negligence?
It is void unless reasonable.
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What is the scope of UCTA 1977?
1)Applies to clauses inserted into agreements by commercial concerns or businesses. 2)It doesn't apply to insurance contracts or contracts re transfer of interest in land.
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What is the Consumer Rights Act?
It consolidates and combines previous legislation contained under UCTA 1977 , UTCRR 1999 and sale of goods act in respect of consumer contracts
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What is the scope of CRA 2015?
1)Applied if one party is consumer and other is business.2)Introduced to simplify,strengthen and modernise law,giving consumers clearer shopping rights.
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What does CRA 2015 say about product quality?
All products must be of satisfactory quality, fit for purpose and as described.
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What does CRA 2015 say about 'fairness' for consumers?
Unless contract term is both prominent and transparent, it can be assessed for fairness.
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What does CRA 2015 say about unfair terms?Give examples of unfair terms.
1)Term unfair for consumer if it's not in good faith.2)Examples of unfair terms-fees and charges hidden in small print,something that tries to limit legal rights,disproportionate default charges and excessive early termination charges.
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What is terms in restraint of trade?
A contract or clause that attempts to restrain the trade of a party.
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What is the general rule for terms in restraint of trade?
Prima facie void. (on its first encounter/at first sight).
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When is terms in restraint of trade upheld?
1)If legitimate proprietary interest to protect. 2)If term is reasonable.
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What are examples of terms that weren't reasonable?
1)Geographical area- Morris v Saxelby 1916. 2)Duration- Esso v Harper's Garage 1968.3)Activity- Attwood v Lamont 1920.
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What happened in Morris v Saxelby 1916?
Facts-Saxelby trained as engineer, told if he left job he couldn't work for similar business or 7 years. He left job and worked for rival company- claimant tried to stop this.Held-Clause unenforceable as everyone free to earn a living.
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What happened in Esso v Harper's Garage 1968?
Facts-Defendant agreed to only sell esso fuel for a small discount. Agreement was for 21 years on one garage.Claimant tried to get injunction to stop H getting cheaper fuel.Held-21 years was beyond reasonable period, so it was void.
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What happened in Attwood v Lamont 1920?
Facts-Tailor left job and told couldn't work within certain radius. Set up shop out of radius but had clients withing. Held-Injunction granted.
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What are other issues with terms in restraint of trade?Which cases relate to them?
1)Blue pencil test.2)Relative bargaining power- panayiotou v Sony Music 1994. ZTT Records v H Johnson 1988.
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What is the blue pencil test?
When court finds that portions of a contract is void or unenforceable, but other portions of the contract are enforceable.
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What happened in the case Panayiotou v Sony Music 1994?
Facts-Claimant argued contract constituted unreasonable restraint of trade. Had to stay with Sony Music for set number of years. Held-Claims rejected and contract deemed reasonable as he was in a position to negotiate contract and before he signed it
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What happened in the ZTT Records v Holly Johnson?
Facts- ZTT said Johnson breached Held-ZTT abused bargaining power.
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What are the 4 ways in which a contract can come to an end?
1)Performance. 2)Breach of condition. 3)Agreement. 4)Frustration
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What is breach of contract?
Occurs where one of parties to the agreement fails to comply, either completely or satisfactory, with their obligations under it.
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What rule is used for performance of a contract?
The rule in Cutter v Powell 1795- Contracts are entire and must be totally performed before parties can claim under them.
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What happened in Cutter v Powell 1795?
Facts- Cutter hired to sail on ship from Jamaica to Liverpool, but died before ship reached Liverpool. widow tried to claim money for the 6 weeks work he had done. Held-Payment was on condition that he worked until the ship reached Liverpool.
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What are exceptions to the Cutter v Powell rule?
1)Prevention of performance-Planche v Colburn 1831.2)Divisible contract Ritchie v Atkinson 1808.3)Partial performance-Sumpter v Hedges 1898.4)Substantially performed-Hoenig v Isaacs 1952.
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What happened in Planche v Colburn 1831?
Facts- Claimant agreed to write book series for defendant £100 on completion. Defendant cancelled series when claimant had written a lot of it and refused to pay.Held-Claimant entitled to £50 as defendant prevented performance.
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What happened in Ritchie v Atkinson 1808?
Facts-claimant agreed to carry a cargo of specified quantity-price per ton.Claimant didn't carry all cargo so defendant refused to pay as contract not completed.Held-contract divided into separate parts per ton claimant entitled to money.
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What happened in Sumpter v Hedges 1952?
Facts-Claimant agreed to build house for defendant, but claimant ran out of money and couldn't complete job halfway through.Defendant finished job themselves.Claimant tried to recover money for work he did.
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What was held in Sumpter v Hedges 1952?
Held- defendant had no choice but to accept partial performance as he was left with a half completed house on his land, so claimant failed.
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What happened in Hoenig v Isaacs 1952?
Facts-Claimant decorated flat, but some of furniture has defects, so defendant refused to pay final installment. Held-claimant substantially performed job so entitled to money minus cost for furniture.
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What are the 2 types of breach of condition?
1)Repudiatory breach. 2)Anticipatory breach.
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What is a repudiatory breach? Give a case example.
Occurs when performance is due-one party indicates through words or conduct that they are in breach of contract. Poussard v Spiers 1876.
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What is an anticipatory breach?
One party declares in advance that they won't perform their contractual obligation.Hochster v De La Tour 1853. White & Carter Council Ltd v McGregor 1961.
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What happened in Hochster v De La Tour 1853?
Facts-April, DLT hired H as travel courier for June. May DLT wrote to H stating he no longer needed him.22/05 H started legal action but DLT said there would be no cause of action until June.Held-Claimant entitled to action when anticipatory breach
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What happened in White & Carter Council Ltd v McGregor 1961?
Facts-M contracted WC to put adverts on bins.M asked WC to cancel contract, but WC refused and displayed the advert and claimed payment.Held-Claimants not obliged to accept repudiation so entitled to claim agreed price.
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What are the 2 different types of agreement?
1)Novation. 2)Accord and Satisfaction.
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What is Novation?
Substitution of new contract for old one- new contract extinguishes rights and obligations of old agreement.
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What is accord and satisfaction?
Agreement between parties of contract in which one party releases the other from the contract in return for some compensation.
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What are events that can cause frustration of a contract?
1)Unexpected events that make contract impossible.2)Outbreak of war. 3)Contracts for personal services.4)Cancellation of event on which contract depends.5)No frustration if alternative performance possible.
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Which case relates to Unexpected events that make contract impossible?
Taylor v Caldwell 1863.
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What happened in Taylor v Caldwell 1863?
Facts-Claimant hired music hall for concerts. Week before first concert, music hall burned down by accidental fire. Claimant tried to bring action for breach of contract and claim damages for expenses.Held-contract frustrated when hall burned down.
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What case relates to outbreak of war 1855?
Avery v Bowden 1855
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What happened in Avery v Bowden 1855?
Facts-Claimant to carry cargo, arrived early for cargo and defendant said they didn't have any cargo to carry and to sail on. Before date cargo was meant to be shipped, crimean war broke out.Held-contract frustrated claimant can't sue for breach.
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Which case relates to contracts for personal services?
Condor v Baron Knights 1966.
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What happened in Condor v Baron Knights 1966?
Facts-Claimant agreed to play drums 7 nights/week for 5 yrs.Claimant suffered mental breakdown and advised to play 4 night/week. Band dismissed him.Held-Contract frustrated as he couldn't perform contract obligations.
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Which case relates to cancellation of event on which contract depends?
Krell v Henry 1903 and Herne Bay Steamboat Co v Hutton 1903.
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What happened in Krell v Henry 1903?
Facts-Contract to hire balcony at hotel to watch coronation. Coronation cancelled. Held- Contract frustrated.
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What happened in Herne Bay Steamboat Co v Hutton 1903?
Facts-Cruise to go round and watch royal Navy Review- cancelled as coronation postponed. Held-Cruise could still happen so contract continued.
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Which case relates to No frustration if alternative performance possible?
Tsakiroglou v Noblee 1962.
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What happened in Tsakiroglou v Noblee 1962?
Facts-defendant agreed to ship peanuts to Hamburg. Canal was closed. Would take 4x longer to go round so defendant didn't carry goods-claimed contract frustrated.Held-Contract not frustrated as peanuts could still be transported.
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Which Act determined the effect of frustrations and expenses?
The Law Reform 1943.
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What are remedies for breach of contract?
1)Specific performance-equitable remedy.2)Injunction-negative stipulation to prevent breach of contract.3)Recission-restoring to pre-contract position.4)Damages.5)Action for the price.6)Quantum Meruit-sue for value of work done.
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When are damages awarded?
1)Remoteness and forseeability. 2)Rule in Hadley v Baxendale 1854.
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What is the rule in Hadley v Baxendale 1854?
1)Arise naturally from breach. 2)Within reasonable contemplation of the parties.
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What happened in Hadley v Baxendale 1854?
Facts-Defendant hired to take crankshaft to be repaired and take back to mill. Was 7 days late so claimant tried to sue for loss of profit.Held-D wasn't aware that the delay would lead to mill being closed.D Not liable.
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What happened in Victoria Laundry v Newman Industries 1949?
Facts-Laundry needed new boiler to enlarge plant. Delay in boiler delivery, laundry lost-normal trading profit and profit on government contracts.Held-Boiler manufacturer liable for loss of normal profit as essential for laundry.
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How are damages measured?
Damages are financial compensation for loss suffered by injured party. Aim to place injured party in financial position they'd be in had there been no breach.
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Which case relates to actual financial loss?
Lazenby Garages v Wright 1976.
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What happened in Lazenby Garages v Wright 1976?
Facts-BMW for sale at LG for £1325, W offers £1670 but changes mind(breach). LG sells car to other customer for £1770. LG try to sue W for loss of profits.Held-LG didn't suffer financial loss so not successful.
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Which case relates to non-financial loss?
Jarvis v Swan Tours 1973.
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What happened in Jarvis v Swan Tours 1973?
Facts-Jarvis booked holiday and accommodation not as described. Held-court granted £30 damages for getting half of what he paid for.
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Which case relates to liquidated damages and penalty clause?
Ford Motor Company v Armstrong.
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If there are liquidated damages in the contract, what must be done?
Must be pre-estimated in order to be enforced
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Which cases relate to principle of mitigation?
Brace v Calder 1895.
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What happened in Brace v Calder 1895?
Facts-Brace employed by partnership for 2 years but partnership dissolved after 5 months.Offered identical employment but Brace refused-sued for wages he would have earned.Held-Brace had not mitigated loss suffered by employers breach of contract.
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What happened in Payzu v Saunders 1919?
Facts-Defendant to deliver goods monthly to claimant
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