Chapter 10 Self-test questions

. May a person who is not a party to a contract acquire rights under it?

Yes, in all cases.

Yes, in most cases.

Not generally, but there are exceptions.

No, never.

. Can a contract generally impose duties on a person who is not a party to it?

Yes, in all cases.

Yes, unless the third party is not aware of the contract.

Yes, where the third party is named in the contract, but has not signed it.

No.

. Which statute may a person who is not party to a contract rely upon to acquire rights under the contract?

Law Reform (Frustrated Contracts) Act 1943.

Statute of Frauds 1677.

Contracts (Rights of Third Parties) Act 1999.

All of the above.

. What is meant by the principle 'privity of contract'?

Only a promisee can enforce a contract.

Contracts must be made in private.

Contracts are documents recognised as valid by the Privy Council.

Contracts may be enforced by any person.

. At common law, where A promises B, for consideration supplied by B, that he will do something for the benefit of C, who may sue to enforce A's promise?

B alone may sue.

C alone may sue.

Either B or C may sue.

Both B and C must sue.

. In Dunlop Pneumatic Tyre Co Ltd v Selfridge, why did the House of Lords reject Dunlop's action against Selfridge for breach of the undertaking?

Dunlop gave no consideration to Selfridge for Selfridge's promise to abide by the undertaking.

The undertaking made by Selfridge to Dunlop was outlawed by the Resale Prices Act 1956.

The undertaking made by Selfridge to Dunlop was outlawed by the Competition Act 1998.

Dunlop gave consideration to Selfridge by allowing Selfridge to buy the tyres at a discount.

. Who has supported the argument that, where there are joint promisees, one of them may sue even if the consideration was supplied exclusively by the other?

The High Court of Australia.

Distinguished academics.

The Law Commission.

All of the above.

. Which of the following is a rationale for allowing third parties to be treated as joint promisees to an agreement?

Privity of contract is of fundamental importance.

The rights of a promisee to enforce a contract are more secure than third party rights.

The rights of a third party to enforce a contract are more secure than the promisee's rights.

The third party has supplied consideration, so it should be able to enforce the contract

. Where consideration in an agreement moves from both B and C to A, who may enforce the contract against A?

B alone may sue.

C alone may sue.

Either B or C may sue.

Both B and C must sue.

. In which of the following circumstances might C be a contracting party?

C must supply the consideration if B does not.

C does not need to supply the consideration even if B does not.

In both of the above scenarios, C is a contracting party.

C will never be a contracting party, since all contracts have only two parties, A and B.

. At common law, can C rely on a contract made between A and B as a defence when he is sued in tort by A?

Yes, because the contract can be used to justify C's actions.

Yes, C may always use a contract between A and B to found an action or a defence.

No, contracts can never exclude a duty of care in tort.

No, unless C has given consideration to A.

. In which circumstances has Lord Denning declared that A may be able to sue C, where C is not named in the contract between A and B?

Whenever it must necessarily be implied that A intended to contract with C.

Where B sub-contracts to C, A may in all sub-contracts treat C the same as B.

In the law of bailment, A is bound by any contract which he has expressly or impliedly authorised B to make in relation to the goods. This includes contracts with C.

Lord Denning has never allowed A to sue C in the absence of a contract.

. On what grounds did the Court of Appeal reject A's claim in Norwich City Council v Harvey and others?

The defendants owed no duty of care to A.

The justice of the case favoured the dismissal of the claim.

The subcontractors could not be expected to know of the clause stating that the risk of fire damage should lie with A.

All of the above were supported by the Court of Appeal.

. Where A and B have made a contract under which A has made some promise for the benefit of C, and A then withholds that benefit, what might B do to enforce the contract?

B can obtain a decree of specific performance against A.

B can sue A for damages for A's breach of contract.

B can seek an injunction against A to restrain him from taking action in breach against C.

All of the above.

. Which of the following statements about specific performance, from Beswick v Beswick, is true?

Specific performance is available in contracts for personal services.

C has a right to specific performance if the contract is not performed by A.

Both a. and b. are true.

Neither a. nor b. is true.

. In which of the following circumstances might B recover more than nominal damages where A has failed to perform a contract to benefit C and B has personally suffered no financial loss?

B and C each has an insurable interest in goods and B takes out an insurance policy with A covering both B and C's interests.

A enters into a contract with B to transport specific goods, and both A and B expect that B will sell those goods to C before the contract is concluded.

A contracts with B to erect buildings on C's land and the work is defective.

All of the above.

. Why is A unable to recover the benefit which A and B have contracted to bestow on C, once it has been transferred to C?

B gave consideration to A and has therefore paid for the benefit.

C gave consideration to B and has therefore paid for the benefit.

C gave consideration to A and has therefore paid for the benefit.

A is able to recover the benefit at any point.

. Where there is a contract between A and B to confer a benefit on C, how may B prevent A from conferring the benefit.

B may instruct A to stop the conferral of the benefit.

B may invite A to rescind the contract, and may then take steps to stop A if A refuses to rescind the contract.

B and A may agree to rescind the contract.

B can never stop the conferral of the benefit one the contract with A has been concluded.

. If A transfers property to B, who agrees to hold that property on trust for C, does C acquire enforceable rights?

Yes, C acquires regular contractual rights because he has given consideration.

Yes, C acquires a proprietary interest in the property as a beneficiary under a trust.

Both options are correct.

Neither option is correct.

. Why will it usually be difficult for C to prove that he may enforce his rights under a trust?

Trusts are not often found in English law.

The contractual promise may be the subject matter of the trust.

The intention to constitute a trust must be affirmatively proved, and this is difficult.

All of the above are correct.

. Why might C prefer to assert his rights to enforce a contract between A and B as a beneficiary under a trust rather than under the 1999 Act?

It is generally easier to prove rights under a trust than it is under the 1999 Act.

C's rights under the 1999 Act might be lost if A and B agree to vary the contract.

Affirmative evidence that B was contracting as a trustee for C is required.

The 1999 Act only applies to limited classes of contract.

. Why might it be argued that The Eurymedon and The New York Star do not create exceptions to the rule of privity of contract?

There was a separate contract between A and B, and A and C.

In those cases, C received the benefit of a trust between A and B, meaning that A was able to sue C.

Both reasons are correct.

Neither reason is correct.

. Why might trusts cases not be viewed as an exception to the doctrine of privity of contract?

In those cases, there is a separate contract between A and B, and A and C.

In those cases, C is prevented from relying on the benefit of an agreement.

Trusts cases rely on distinct principles of the law of trusts.

All of the above are correct.

. Which of the following constitutes a true exception to the rule of privity of contract, and permits a third party to sue on a contract to which he is not a party?

The Contracts (Rights of Third Parties) Act 1999

A bailor of goods is bound by contracts made by the bailee in relation to the goods, to which the bailor has impliedly consented.

Both options are correct.

Both options are incorrect.

. For a qualifying contract under the 1999 Act, how might the third party be identified under s1(3)?

By name.

As a member of a class.

As answering a particular description.

All of the above.

. May A raise defences to an action for breach of contract brought by C?

Yes, even those not available if a similar action were brought by B.

Yes, to the extent that A would also have been able to use the defence in an action brought by B.

No, A can never raise a defence to a breach of contract claim.

No, because C was not a party to the contract between A and B.

. Can B and C sue A under the 1999 Act for the same damage?

Yes, A can be liable to both B and C, each to the full extent.

Yes, A can be liable to both B and C, but the award will be reduced taking into account the amount recovered by each.

No, only B can sue A.

No, only C can sue A.

. When might a contract between A and B impose an obligation on C?

Always.

When C is intended to receive a benefit under the agreement.

B is C's agent, and agrees to enter into the contract with A.

Never.

. According to Lord Denning in Morris v CW Martin & Sons Ltd, how might A use his contract with B to deny liability in tort to C?

A cannot use his contract with B to deny liability in tort to C.

A could use a liability clause in the contract, expressly excluding liability to C.

A could use a liability clause in the contract which implicitly excludes liability to C.

A contract between A and B will always exclude liability to C.

. In which of the following circumstances may C be restrained from enforcing his contractual rights?

C knows that B has granted A a right of first refusal over certain land, but nevertheless enters into a contract to buy the land from B.

C knows that B has chartered his ship to A, but C nevertheless charters that ship from B.

C will be restrained from enforcing his contractual rights in both a. and b.

C will be not restrained from enforcing his contractual rights in either a. or b.

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