Contract Law Tutorial 2 – Exemption Clauses

Contract Law

Tutorial 2 – Exemption Clauses

1.    Prepare a full written answer to the following for peer assessment. Remember the problem solving answering technique.
Louise is a regular guest at Rockby Hall Hotel. Last weekend she went to the hotel and  booked in at reception and at the reception desk where she booked in is a sign

saying,
“ The hotel accepts no liability for any personal injury suffered on the premises.”
In her hotel bedroom on the back of the door is a sign saying that,
“The liability for loss, theft or damage to guests’ property is limited to £50.” This is also printed on the back of a receipt Louise was given at reception when she

booked in.
Louise is severely injured when she falls down some stairs in the hotel due to badly fitting and worn carpet and her diamond earrings, worth £2000, are stolen from the

hotel safe when the keys for the safe are left unattended at the reception desk.
Advise  Louise (the claimant) as to the hotel’s liability and the effectiveness of the clauses.

Tutorial 3 – Misrepresentation
2.Prepare an answer to the following for peer and tutor assessment:

Racquets Ltd (“R Ltd) operates tennis and fitness centres open to members only. Jane entered into a 12 month membership agreement with R Ltd for membership of her

local centre in January at a cost of £65 per month. At the trial session 2 months previously, the centre manager told her the courts and facilities were 2 “state of

the art and practically band new” and that their coaches and instructors were “probably the best in the country” and “several had trained with top tennis players

including Andy Murray”.
In the standard written agreement, there was no mention of the quality of the facilities or the experience of the coaches. On her last visit to the centre, she was

severely injured when the treadmill she was using broke.

Jane has now discovered that the treadmill she was using was 10 years old and poorly maintained and that none of the current coaches had ever worked with any top

tennis players. One who had trained with Andy Murray left 1 month before Jane joined the centre.

Advise Jane as to whether the 3 statements made by the manager at the trial session are terms of the contract and whether there is any alternative claim in

misrepresentation

Tutorial 4 –Mistake
1.  “The law relating to the impact of common mistake on the validity of a contract is in a mess”.

Discuss with particular reference to the impact of the decision in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ. 1407.

3.The rest of the tutorial will be devoted to additional feedback on the assignment for Contract 1 and your answer to the above question and portfolio preparation.
Make sure you bring your feedback sheets with you. In the tutorial you will be asked to identify and agree with your fellow group members your 3 key strengths and 3

areas for improvement. Make a note of these for your portfolio
STRENGTHS                        AREAS FOR IMPROVEMENT
1.                                1.
2.                                2.
3.                                3.

Tutorial 5 – Duress
3.  Prepare a full written answer to the following problem for presentation to the rest of the tutorial group and peer assessment.
Dragon Retail Ltd imports and sells toys from China. Dragon contracted to buy 50, 000 at £5 each from China Link Ltd the UK agents. Dragon had £100,000 worth of orders

for the toy before Christmas. Due to production problems in China, China Link said the price had to be increased to £7.50 each to ensure delivery before Christmas.

Dragon agreed as they did not want to be unable to fill their orders. In addition, Dragon agreed to Trade Union demands just before Christmas to increase staff wages

and holidays to avoid a threatened strike that would have prevented delivery of the Christmas orders and put them in breach of contract with their customers.
Advise Dragon as to whether they can avoid the contracts with their employees and China Link and recover the extra money paid.

Tutorial 6 – Undue Influence
3. Prepare a full written answer to the following problem for presentation to the rest of the tutorial group and peer assessment.
Jack Jones runs a building and construction company, Local Builders Ltd. Jack is the majority shareholder and sole director. His long term girlfriend, Alice is the

company secretary but takes no part in the business and owns just one share. They own a house in their joint names where they live together. The business is expanding

and to finance the expansion, County Bank has agreed to extend Local Builders’ overdraft but are requiring additional security. Jack has agreed to grant the Bank a

mortgage over the joint home using the joint home as security. Alice and Jack and Local Builders have banked with County Bank for 15 years and are good friends with

the Bank Manager. Jack tells Alice that the mortgage is just to cover a short term loan for £7000 to finance their daughter’s wedding. In fact the overdraft is

unlimited. Alice signs the mortgage document without reading it. The document includes a statement saying that all those signing have had separate legal advice.
Due to a downturn in the market, Local Builders Ltd have failed to make repayments to the Bank who have called in the overdraft and are seeking to enforce the mortgage

and get possession of Jack and Alice’s joint home
Advise Alice as to the enforceability of the mortgage

Tutorial 7 – Illegality
Letitia is the tenant of 2 pubs in Hotton. She has an agreement with the Landlord brewery to buy all her beer and spirits from them for 5 years in respect of 1 pub and

25 years in respect of the other. In addition, the agreement provides that she will not open another pub or work for any other pub within 5 miles of Hotton Town centre

for a period of 2 years after expiry or transfer of her leases from the brewery. Letitia wants to change suppliers and wants to know if she is bound by the clause

relating to her future employment.
Advise Letitia and the brewery as to the validity of the 2 clauses.

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