Chapter 10 Self-test questions

Which of the following is NOT included in an assessment of damages:

Remoteness of damage.

Quantum.

Mitigation.

The sum identified in a penalty clauses.

Where both parties have obligations outstanding under the contract and if both agree to release each other from further obligations, the contract will be discharged by these mutual exchanges of promises. This is called _________ discharge.

Where complete performance of a contract has not taken place, yet a substantial proportion of the contract has been completed, the innocent party has an obligation to pay. This payment will be based on that agreed in the contract, having taken into account the shortcomings of the contract and reduced the figure accordingly.

True

False

Which of the following is NOT an equitable remedy?

Damages.

Specific performance.

Injunctions.

Rectification.

____________ is a doctrine developed by the courts in order to provide relief in circumstances whereby a contract could not be performed or had become radically different from that contemplated (and this was the fault of neither party).

Having established a contract, a party who has completed their part of the agreement, and who promises to release the other party from their (uncompleted) obligations, has entered into a legally binding contract if the other party unconditionally accepts. No further steps or formalities are required.

True

False

In the event that a party who had contracted to sell his/her home to the purchaser subsequently refuses to perform his/her side of the bargain, which of the following remedies would the courts most likely award?

Damages.

An injunction.

Restitution.

Specific Performance.

The case Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour is authority for the proposition that a contract which subsequently becomes ________ will be held to be frustrated.

The doctrine of frustration of contract provides that on the frustrating event, the parties must have already completed their contractual obligations or they will be held in breach.

True

False

When will the courts make an order of frustration of contract:
i) When the contract becomes impossible to perform with no fault of either party;
ii) When the contract becomes radically different from that agreed by the parties with no fault of either party;
iii) When the contract becomes too expensive to be profitable;
iv) When the contract cannot be performed in the exact manner specified in the agreement.

i and ii.

i, ii and iii.

All of the above.

i and iv.

A breach of a __________ of the contract gives the injured party the option to both end (repudiate) the contract and claim to damages.

To 'protect' themselves against a frustrating event ending the contract, the parties may establish a force majeure clause that makes provision for the frustrating event.

True

False

Breach of which term would always entitle the innocent party to repudiate the contract?

A warranty.

A condition.

An innominate term.

An extraordinary term.

Where __________ _______ occurs, the innocent party can accept this as a breach immediately and treat the contract as repudiated. Or he/she can wait for the time when performance was due, and when the contract is breached, then seek a remedy.

Where anticipatory breach occurs, the innocent party can: 1) accept this as a breach immediately and treat the contract as repudiated. 2) Or they can wait for the time when performance was due, and when the contract is breached, and then seek a remedy.

True

False

In relation to a contract that has not been completed, but has been substantially performed, the innocent party:

Is required to pay the full contractual amount.

Is required to pay the amount due, taking into account the shortcomings of the contract and deducting an amount accordingly.

May refuse to pay any money owed until full completion has taken place.

Must pay 50% of the contractual fee and nothing more, regardless of the amount of work completed.

In the event that a contract is not performed, or obligations under the contract are not fulfilled, the innocent party may be entitled to compensation. Under the common law, this is usually in the form of _________.

Liquidated damages are assessed and determined by the courts. Such an award is based on the breach and the damage sustained, having taken into account all the factors of the case.

True

False

In the absence of any specific agreement by the parties, where a contract has been frustrated, but before the frustrating event a valuable benefit (other than a payment of money) has been received by one of the parties, what right does the other party have?

No rights, under frustration benefits and losses lie where they fall.

To establish a new contract that includes the benefit.

To claim for all of those benefits received by that party.

To share in those benefits.

A pre-assessment of damages in the event of a breach and included in the contract is called ___________ damages.

The purpose of damages is to either place the injured party in the position they would have been had the contract been completed (expectation losses) or place the injured party in the position he/she was before the contract had began (reliance losses).

True

False

When faced with a breach of contract, what action will the court expect the injured party to take?

To wait until the full consequences of the breach are realised without taking action to prevent these, to enable the damages to mount up.

To mitigate his/her losses.

To take any measures possible to lessen the effects of the breach.

To take out a new contract with another party, regardless of costs, to minimise any negative effect for the injured party.

As opposed to expectation loss, ________ loss is designed to prevent the injured party from suffering financial harm and aims to return him/her to their position before the contract had been established.

Damages for injured feelings / loss of enjoyment are never recoverable in breach of contract claims.

True

False

Which one of the following is the CORRECT statement?

Specific performance allows a court to substitute its own contractual terms for those of the parties which it will order to be performed.

Failure to comply with an order for specific performance will make the defendant liable to proceedings for contempt of court.

A court may only grant an order for specific performance if both the subject matter of the contract and the person subject to the order are within the jurisdiction of the court.

An order for specific performance may be awarded together with damages on breach of contract.

The requirement for the innocent party to a breach of contract to minimise his/her losses is called the duty to ________ loss.

The duty of mitigation of loss requires the innocent party to take whatever steps are available, regardless of how unreasonable, to reduce losses sustained as a consequence of a breach of contract.

True

False

Which one of the following cases first decided the two-stage test to be applied when considering the issue of remoteness of damage in the law of contract?

Victoria Laundry v Newman Industries (1949).

Pilkington v Wood (1953).

Hadley v Baxendale (1854).

Parsons (Livestock) Ltd v Uttley Ingham Ltd. (1977).

There are two main types of injunction available to the courts—mandatory injunctions and ___________ injunctions (although interim injunctions may be granted prior to a full hearing to prevent injury to the claimant).

The equitable remedy of specific performance is available to the courts following a finding of breach of contract. For example, following a finding of wrongful dismissal in a contract of employment, the claimant simply has to choose between this remedy or the common law remedy of damages.

True

False

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