Contract Law Problem Questions: Model Answers Guide

Overview

Contract law problem questions require a structured approach to analyze legal scenarios and provide advice to parties involved in contractual disputes. The most widely used method for answering these questions is the IRAC/ILAC framework, which stands for Issue, Rule, Application/Analysis, and Conclusion.

The IRAC/ILAC Method

1. Issue (I)

This section identifies the narrow legal issue that needs to be resolved to advise the parties. The issue should be:

• Specific and focused on the legal problem
• Framed as a question when possible
• Related to contract law principles (not just factual questions)

Example: Rather than asking “Does Carol get the gift voucher?”, the legal issue is “Is there a valid contract between Carol and Brandons based on offer and acceptance?”

2. Law/Rule (R/L)

This section explains the legal principles that need to be applied to resolve the identified issue, with supporting authority from case law or statutes. The rule should be:

• Articulated as a universal principle
• Supported by relevant cases and statutes
• Explained clearly without excessive detail on case facts

3. Application/Analysis (A)

This is the longest and most important part of your answer, where you apply the rule to the specific facts in the problem scenario. You should:

• Use the facts to explain how the rule leads to the conclusion
• Discuss both sides of the case when possible
• Never state conclusions without reasoning
• Consider alternative interpretations when the law is unclear

4. Conclusion (C)

The conclusion should be a brief summary that wraps up your advice, stating the likely outcome for the parties. It should:

• Be clear and transparent
• Use qualifying language like “is likely to” when facts are uncertain
• Not repeat everything already discussed

Common Contract Law Problem Question Topics

Offer and Acceptance

These questions often involve multiple parties and communications, requiring you to separate out parties and discuss them individually to determine if valid offer and acceptance exists between each pair.

Key Legal Principles:

Offer vs Invitation to Treat:

• The courts use an objective approach: would a reasonable person believe the offeror intended to be bound? If yes, an offer has been made; if not, it’s an invitation to treat
• Words like ‘considering’, ‘wonder’, ‘expect’ are too equivocal to constitute an offer (Gibson v Manchester City Council)

Counter-offers:

• A counter-offer destroys the original offer (Hyde v Wrench)
• A mere enquiry for clarification doesn’t constitute a counter-offer (Stevenson v McLean)

Revocation:

• An offer can be revoked at any time prior to acceptance, and revocation need not necessarily be communicated by the offeror directly
• A promise to keep an offer open is unenforceable without consideration

Acceptance:

• Silence cannot constitute acceptance (Felthouse v Bindley), as this would force a contract on an unwilling party

Consideration

A legally binding variation of an existing contract requires agreement, consideration, and intention to create legal relations.

Key Legal Principles:

• Consideration must be something of value in the eyes of law (Thomas v Thomas)
• Past consideration is generally not valid
• Part payment of a debt is not good consideration (Foakes v Beer)

Misrepresentation

A misrepresentation is a false statement made prior to contract formation, and if it’s not a contractual term, remedies are available under the law of misrepresentation.

Types of Misrepresentation:

1. Fraudulent: Made knowingly false, without believing it’s true, or recklessly as to its truth (Derry v Peek)
2. Negligent: Under s.2(1) Misrepresentation Act 1967, the burden is on the defendant to show reasonable grounds for believing the statement was true
3. Innocent: Belief on reasonable grounds until the time of contract that the facts represented are true

Remedies:

• Rescission: Aims to put parties back into the position they were before the contract, though there are ‘bars’ to rescission that may prevent this remedy
• Damages: For fraudulent and negligent misrepresentation, damages can cover all losses flowing from the transaction, even if not foreseeable

Breach of Contract

Breach of a contractual condition entitles the innocent party to terminate or affirm the contract.

Remedies for Breach:

• For completed performance, an action for an agreed sum is likely to succeed
• Damages for pecuniary loss that is not too remote
• Obligation to mitigate losses

Best Practices for Answering Problem Questions

Structure and Approach

Begin directly by considering the first issue raised and work logically through the problem, dealing with each issue in turn, using authority for each point made.

Do:

• Accept as true the facts that are given, even if unlikely
• Present points in a coherent and logical way (e.g., identify an offer before looking at acceptance)
• Make clear when considering alternatives to avoid appearing to contradict yourself

Don’t:

• Assume facts which are not given or ponder what would have happened if facts were different
• Repeat the facts of the problem unless using them to identify the legal issue
• Worry about how unlikely the facts might be

Using Case Law

Give only the case name if citing it for a broad general proposition; go into detailed facts only when distinguishing cases or when there are significant similarities in wording.

Dealing with Uncertainty

If the legal position is unclear, explain the uncertainty and suggest how it might be resolved, including your view of the most likely approach a court would take. Note that there is often no right answer in legal problem questions because examiners use issues where there are uncertainties in applying the law.

Common Pitfalls to Avoid

1. “Layman’s law”: Do not produce an answer based purely on policy that ignores the law, as this can lead to a failing grade
2. Over-formatting: Avoid excessive use of bullet points and lists unless specifically requested or essential for clarity
3. Missing issues: Usually there are 3-5 legal issues in a standard problem scenario, and you must identify every single one to get a good mark
4. Imbalanced treatment: Avoid spending too much time on non-contentious issues at the expense of more significant ones

This structured approach, combined with thorough knowledge of contract law principles and careful application to facts, will help you produce high-quality answers to contract law problem questions.