Chapter 11 Self-test questions

. If a contract is concluded orally, where will the terms usually be found?

In the subject of the contract.

In the negotiations between the parties.

In the consideration supplied by the promisee.

None of the above.

. Why did the court in Bentley (Dick) Productions Ltd v Smith (Harold) (Motors) Ltd reach a different conclusion to the court in Oscar Chess Ltd v Williams, in relation to incorporated terms?

The subject of the contracts in each case was different.

The seller was an expert in Bentley and the buyer was not.

Neither party in Bentley were experts; both were experts in Oscar Chess.

Both parties in Bentley were experts; neither were experts in Oscar Chess.

. What is required for a statement issued during the course of negotiations to become a term?

B must reasonably rely on A's statement and A knows, or ought to know, that B may be relying on that statement.

B does not need to reasonably rely on A's statement, but A must believe that B may be relying on that statement.

The statement must subsequently be confirmed in writing and signed by A.

All statements issued during the course of negotiations will become terms.

. Which of the following examples constitutes an exception to the rule that a signature binds the party to the contract?

B has not read the contract.

B has not understood the contract.

A induces B through fraud to sign the contract, and this fraud leads B to believe that the terms were fundamentally different from what they actually were.

A induces B through fraud to sign the contract, and B is negligent in reading the terms.

. Which of the following statements best encapsulates the approach of the courts in assessing whether 'reasonable notice' has been given such that a term will be incorporated into the contract?

Provided the term is written down and could be read by B, the term will always be incorporated into the contract, irrespective of how far-reaching the term is.

If B receives the term in a ticket, all terms on that ticket will be incorporated.

A must ensure that B reads and understands all terms in all circumstances, for them to be incorporated.

The more far-reaching the term, the more that A must do to bring to B's attention its existence.

. In which of the following circumstances will a term be incorporated into the contract through a course of dealing?

A and B contract hundreds of times. Each time, A hands B a notice with terms attached, but B does not read it.

A and B contract hundreds of times. Sometimes, A hands B a notice with terms attached.

A and B contract infrequently over a period of years. Each time, A hands B a notice with terms attached.

A and B contract for the first time to hire a crane. A hands B a notice with terms attached. A is in the business of hiring cranes, but B is not.

. What is a collateral contract?

A separate contract which replaces all of the terms of a previous contract for particular subject matter.

A contract concluded orally.

An additional contract, ancillary to the principal contract, which establishes additional terms to the agreement.

The list of terms to an agreement which have not been incorporated.

. Why might the courts be reluctant to accept collateral contracts?

The terms in the collateral contract might contradict the express terms in the main contract.

They can have the same effect as a variation clause in the main contract.

Both above options are correct.

None of the above options are correct.

. Can collateral contracts arise where A makes a promise to B in consideration of B's entering into a contract with C?

Yes.

Only if A's promise is supported with consideration.

Only in contracts for the sale of land.

No.

. What is the parol evidence rule?

If the parties have concluded their agreement through a combination of written and oral means, only the written document is presumed to be the whole contract. The courts will not admit evidence to add to, vary, or contradict the written agreement.

If the parties have concluded their agreement through a combination of written and oral means, only the written document is presumed to be the whole contract. However, the courts will admit evidence to add to, vary, or contradict the written agreement.

When the parties have concluded their entire agreement in writing, that document is presumed to be the whole contract. The courts will not admit evidence to add to, vary, or contradict the written agreement.

When the parties have concluded their entire agreement in writing, that document is presumed to be the whole contract. However, the courts will admit evidence to add to, vary, or contradict the written agreement.

. Which of the following is a reason in favour of the parol evidence rule?

The rule strengthens confidence in the written agreement.

The rule affords less scope for bad faith.

The rule provides certainty for parties once a contract is concluded.

All of the above options are correct.

. Which of the following circumstances may constitute a valid exception to the parol evidence rule?

A wishes to vary the contract, by referring to pre-contractual oral negotiations.

B wishes to set aside the contract, by raising evidence that his agreement was induced under duress.

B attempts in bad faith to vary the contract with a separate agreement.

All of the above options are correct.

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