SQE1 Contract Law: Complete Guide
Contract Law is one of the most heavily tested subjects in SQE1, covering the rules that govern how agreements are formed, what terms they contain, and what happens when one party fails to perform. It sits within the FLK1 assessment and underpins several other SQE1 topics, including Business Law, Property Practice and Dispute Resolution.
Many candidates find it challenging because of the sheer volume of principles involved and the precision required to apply them correctly under timed conditions. But with a structured approach and consistent practice, you can master this critical area and significantly boost your exam performance. Understanding formation of a contract and terms of a contract will give you the foundation needed for every scenario-based question.
Explore This Topic
Formation & Structure
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Formation of a Contract for SQE1 — Offer, acceptance, consideration, intention to create legal relations and capacity. The foundation of every contract law question.
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Consideration in Contract Law for SQE1 — What counts as valid consideration, part-payment of debt, and common pitfalls in identifying sufficient consideration.
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Terms of a Contract for SQE1 — Classification of terms, incorporation of terms, express vs. implied terms, and statutory implied terms under consumer protection legislation.
Challenges to Validity
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Misrepresentation and Vitiating Factors for SQE1 — Misrepresentation, mistake, duress, undue influence and illegality. How to identify which vitiating factor applies and its legal consequences.
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Exclusion Clauses and Unfair Terms for SQE1 — Statutory controls under UCTA 1977 and the Consumer Rights Act 2015. The reasonableness and fairness tests.
Performance & Enforcement
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Discharge of a Contract for SQE1 — Discharge by performance, agreement, breach and frustration. When a contract ends and what triggers each route.
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Remedies for Breach of Contract for SQE1 — Damages (including remoteness and mitigation), specific performance, injunctions and equitable remedies. How to calculate loss and when each remedy is available.
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Privity of Contract and Third-Party Rights for SQE1 — The doctrine of privity and its statutory exception under the Contracts (Rights of Third Parties) Act 1999.
Exam tip
The distinction between a condition and a warranty turns entirely on the parties' intention—how serious is the term? If breach would destroy the whole point of the contract (condition), the innocent party can terminate. If it's less critical (warranty), they can only claim damages. Examiners always embed this trap: choose an answer assuming one classification without asking whether the parties intended something different.
What Is Contract Law?
Candidates often lose marks on SQE1 by treating all breaches as equal — but the distinction between a condition and a warranty, or between a repudiatory and minor breach, determines whether the innocent party can terminate or merely claim damages. This is a test the examiners repeat.
Contract Law governs legally binding agreements between parties. It sets out:
- Requirements for a valid contract — offer, acceptance, consideration, intention to create legal relations and capacity
- Rules on what terms are included — whether express or implied, and how they are incorporated
- Circumstances in which a contract may be void or voidable — including misrepresentation, mistake, duress and undue influence
- Remedies available when a party breaches — damages, specific performance and injunctions
Within SQE1, Contract Law is tested extensively. The exam expects you to identify legal issues within realistic client scenarios and apply the correct principles — not simply recall definitions. Because contract law principles appear in so many other practice areas, a strong foundation here will improve your performance across the entire FLK1 paper.
Core Areas Tested in SQE1
The core areas for this topic are covered in the subtopic guides listed in Explore This Topic above.
Key Principles for SQE1
Use a structured approach: identify the issue, apply the correct rule, and choose the best answer based on the facts.
How This Appears in SQE1 Questions
SQE1 Contract Law questions typically present a factual scenario and ask you to identify the correct legal rule or outcome. This is one of the most commonly tested areas in SQE1 — examiners regularly combine formation, terms, and remedies in a single question. Expect questions on whether a contract has been formed, what terms are implied, whether a breach has occurred, and what remedies are available.
Contract Law questions follow the single-best-answer format with five options (A–E). Almost every question is scenario-based: you will be presented with facts about a contractual dispute or negotiation and asked to identify the correct legal position, the most appropriate remedy or the next step a solicitor should take. This is one of the most heavily tested areas in SQE1, and distractors are carefully designed to trap unprepared candidates.
The examiners design distractors carefully. You will often encounter answer options that state a correct legal principle but apply it to the wrong facts, or that confuse one vitiating factor with another. Questions may also combine subtopics — for example, a scenario involving both an exclusion clause and a misrepresentation — requiring you to identify the issue that takes priority.
How to Revise Contract Law Effectively
Build your revision around the life cycle of a contract. Think of it in stages: formation → terms → performance → breach → remedies. This gives you a logical framework that mirrors how exam scenarios are constructed.
Focus on understanding principles rather than memorising case names. You should know that remoteness of damage is governed by the rule in Hadley v Baxendale, but the exam tests whether you can apply that rule to unfamiliar facts — not whether you can recite the judgment.
Pay particular attention to the boundaries between similar concepts. The distinction between a condition and a warranty, between misrepresentation and a term of the contract, and between frustration and breach are all areas where candidates frequently lose marks.
Common Mistakes Students Make
Distinguishing Vitiating Factors
Misrepresentation, mistake, duress and undue influence can overlap in their facts. Candidates often identify the correct area of law but select the wrong vitiating factor, particularly where a scenario involves elements of both misrepresentation and mistake.
Applying Damages Rules Correctly
The remoteness test, the duty to mitigate and the distinction between expectation and reliance loss are frequently tested. Candidates who learn these rules in isolation sometimes struggle when a question requires them to apply more than one rule to the same set of facts.
Navigating Statutory Frameworks for Unfair Terms
The interaction between UCTA 1977, the Consumer Rights Act 2015 and the common law rules on incorporation creates a layered framework that many candidates find difficult to apply under timed conditions.
Recognising When a Contract Has Been Discharged
Frustration, repudiatory breach and discharge by agreement each have distinct requirements. Questions may describe a situation where more than one route to discharge seems plausible, and precision in applying the legal tests is essential.
Quick Summary
Contract Law in SQE1 covers three core areas:
- Formation: Offer, acceptance, consideration, intention to create legal relations and capacity must all be present for a binding contract to exist.
- Content & Challenges: Terms are classified, incorporated and may be express or implied. Contracts can be void or voidable due to misrepresentation, mistake, duress, undue influence or illegality.
- Discharge & Remedies: Contracts end through performance, agreement, breach or frustration. When breached, the primary remedy is damages (subject to remoteness, mitigation and duty calculations), with equitable remedies available in limited circumstances.
Want to test this now? Try a few SQE1-style questions below before moving on.
Test Yourself
Test yourself
Quick check questions based on this article.
Question 1
Scenario
A supplier promises to deliver 200 units of stock to a retailer by Friday. The retailer, anxious about timely delivery, offers the supplier an additional £500 if the stock arrives by Wednesday instead. The supplier delivers the stock on Wednesday. The retailer's warehouse manager confirms that the stock arrived in good condition. The retailer now refuses to pay the additional £500, arguing that the supplier was already contractually obliged to deliver by Friday. The supplier operates from a warehouse approximately ten miles from the retailer's premises. The retailer had previously experienced delivery delays with a different supplier, which caused stock shortages. The original contract was agreed after two rounds of negotiation over email. The supplier's delivery driver confirmed that the early delivery was arranged specifically at the supplier's initiative.
Is the retailer likely to be obliged to pay the additional £500?
Question 2
Scenario
A catering company enters into a contract with an events organiser to provide food for a corporate dinner for £8,000. Two weeks before the event, the catering company informs the organiser that its head chef has resigned and it may not be able to deliver the agreed menu. The organiser, unable to find an alternative caterer at short notice, offers to pay an additional £2,000 if the catering company fulfils its obligations under the original contract. The catering company recruits a temporary chef and delivers the agreed menu on the night of the event. The organiser refuses to pay the additional £2,000, arguing that the catering company simply did what it was already contracted to do. The events organiser's assistant had separately noted that several important clients were attending the dinner. The events organiser has been in business for eight years and typically organises between 10 and 15 corporate events per year. The catering company is a family-run business that has provided catering for three previous events organised by the same company. The temporary chef recruited by the catering company had previously worked at a Michelin-starred restaurant.
Is the catering company likely to be entitled to the additional £2,000?
Question 3
Scenario
A landlord leases commercial premises to a restaurant owner for £4,000 per month. After the restaurant suffers a significant drop in revenue, the landlord agrees in writing to reduce the rent to £2,500 per month "until business improves." The restaurant's revenue recovers after eight months, but the restaurant owner continues to pay only £2,500 per month. The landlord writes to the restaurant owner giving one month's notice that full rent of £4,000 will be required from the following month. The restaurant owner argues that the landlord cannot reinstate the full rent because the written agreement permanently varied the lease. The original lease contains no clause requiring variations to be in writing. The landlord has not claimed any arrears for the eight-month period during which reduced rent was paid. The restaurant owner's solicitor advises that the landlord's written concession may have created a binding variation, but notes that any advice must be accurate and in the client's best interests under SRA Principle 7. The landlord's decision to reduce the rent was communicated to the restaurant owner during a face-to-face meeting at the premises.
Which of the following best describes the landlord's right to reinstate the full rent of £4,000 per month?
Practice with full exam-style questions
Practise Contract Law Questions for SQE1
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