Lecture 5 examples

Question 1

Customer signs contract without reading terms. Bound?

Answer 1

Yes. Signature binds the party to all contractual terms.

Question 2

Term shown on sign after payment. Binding?

Answer 2

No. Notice was given after contract formation.

Question 3

Hidden penalty clause in small print. Binding?

Answer 3

No, unless clearly highlighted due to its onerous nature.

Question 4

Parties dealt once a year with different terms. Course of dealing?

Answer 4

No. Dealings are too sporadic and inconsistent.

Question 5

Regular contracts on identical terms between same parties?

Answer 5

Yes. Terms may be incorporated by course of dealing.

Question 6

Ambiguous clause with two meanings, one commercially sensible?

Answer 6

Court adopts the commercially sensible interpretation.

Question 7

Clause is clear but produces harsh result. Enforced?

Answer 7

Yes. Courts enforce clear wording even if unfair.

Question 8

Obvious numerical error in contract price?

Answer 8

Court may correct the obvious drafting mistake.

Question 9

Contract works but one party suffers loss due to gap?

Answer 9

No implied term if contract still functions.

Question 10

Lease silent on common area maintenance. Landlord duty?

Answer 10

Yes. Term implied in law requiring landlord to maintain common areas.

Question 11

Employee unaware of hidden contractual right. Employer duty?

Answer 11

Employer may have a duty to inform under implied terms in law.

Question 12

Consumer buys defective goods, contract excludes liability?

Answer 12

Exclusion ineffective due to statutory implied terms.

Question 13

Exclusion clause clearly excludes liability in B2B contract. Valid?

Answer 13

Yes at common law, subject to UCTA reasonableness.

Question 14

What happens if a negligence exclusion clause is unclear or ambiguous?

Answer 14

The clause does NOT exclude negligence.
If a party wants to exclude liability for negligence, the wording must be clear and unambiguous. Any ambiguity is interpreted against the party relying on the clause.

Question 15

A contract limits the seller’s liability to a very small sum. The seller is insured, and the buyer has weak bargaining power. Is the clause valid?

Answer 15

Likely NO.
Under UCTA, liability-limiting clauses are enforceable only if reasonable.
A clause is likely unreasonable and invalid where:

the liability cap is disproportionately low,

the seller could insure against the risk, and

the buyer had little bargaining power.

As a result, the seller cannot rely on the clause.

Question 16

Consumer contract excludes liability for quality?

Answer 16

In UK law, a consumer contract cannot exclude liability for quality; such clauses are invalid under the Consumer Rights Act 2015.

Question 17

Contract terminated early; claim liquidated damages after?

Answer 17

No. Liquidated damages usually stop at termination.

Question 18

If a contract is terminated, does a liability cap or limitation clause still apply to a damages claim?

Answer 18

Yes, usually.
Termination ends future performance, but clauses allocating risk — such as liability caps and exclusion clauses — normally survive termination, unless the contract clearly states otherwise.

Example:
A contract is terminated for breach, but it contains a clause limiting liability to €50,000 → damages are still capped at €50,000.Yes. Limitation clauses usually survive termination.

Question 19

Employee deliberately causes damage; exclusion clause applies?

Answer 19

Yes if clause clearly covers employee acts.

Question 20

Damage caused by employee negligence; clause silent?

Answer 20

Liability likely applies due to ambiguity.

Question 21

Party claims general duty of good faith in ordinary contract?

Answer 21

Fails. No general duty of good faith.

Question 22

Long-term trust-based distribution contract with misleading conduct?

Answer 22

Possible implied duty of honesty and cooperation.

Question 23

Good faith argument contradicts express contract wording?

Answer 23

Fails. Express wording prevails.