Chapter 19 Self-test questions

. When may a contract be unconscionable?

If the claimant is 'poor and ignorant'

If the terms of the contract are substantially disadvantageous to the claimant.

If the claimant had no independent advice.

All of the above options are correct.

. Did the court in Fry v Lane set out exhaustively the circumstances under which unfair dealing may be made out?

Yes.

No.

. Which of the following statements about unconscionable bargains is true?

The argument that a contract should be voidable as an unconscionable bargain always succeeds.

The argument that a contract should be voidable as an unconscionable bargain often succeeds.

The argument that a contract should be voidable as an unconscionable bargain rarely succeeds.

The argument that a contract should be voidable as an unconscionable bargain never succeeds.

. How prepared are the courts to step in and hold that a contract can be set aside whenever there is an inequality of bargaining power between the parties?

The courts will step in whenever there is any inequality of bargaining power.

The courts will step in only where there is a substantial inequality of bargaining power.

The courts will rarely step in in such circumstances.

The courts never step in: there are no legislative or common law protections for weaker parties.

. Why did the Court refuse to endorse a common law doctrine of inequality of bargaining power in National Westminster Bank v Morgan?

Powerful parties should be free to prey on weaker ones.

Parliament has undertaken the task of enacting restrictions upon freedom of contract.

Freedom of contract must never be undermined.

None of the options given is correct.

. Which of the following options was not a reason identified by Lord Denning in Lloyds Bank v Bundy, to conclude that Bundy fell within his general principle of inequality of bargaining power?

The consideration provided by the bank was grossly inadequate relative to the risks the father was undertaking.

The bank and the father were in a relationship of confidence.

The bank had never met the father or the son.

The bank had a conflict of interest between the bank's interests and the father's interests.

. Which of the options given is not a relevant consideration as to whether a relationship is unfair under section 140A of the Consumer Credit Act 1974?

Whether the contract is written or oral.

The terms of the agreement.

The way in which the creditor exercised or enforced their rights under the agreement.

Anything done by, or on behalf of, the creditor.

. Will all unequal creditor-debtor relationships be caught by the 1974 Act?

Yes.

No.

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