Chapter 16 Self-test questions

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. Why is English law so reluctant to allow a party to set aside a contract into which he has entered on the ground that he was mistaken in his 'innermost mind' when he entered into the contract?

Because mistakes usually prevent the formation of any contract from the outset correct incorrect

Because the courts have adopted an objective approach to the existence of an agreement correct incorrect

Because the courts are reluctant to make third parties pay for the mistakes of parties to a contract correct incorrect

Because mistakes in contract are not usually very serious correct incorrect

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. Which of the following statements is true as regards a 'voidable' contract?

A voidable contract implies that rescission is not required correct incorrect

A voidable contract can only be rescinded with prospective effect correct incorrect

A voidable contract remains valid until the right to set aside the contract has been exercised and, when it is exercised, its effect is to set aside the contract retrospectively. correct incorrect

A voidable contract is a nullity and can have no legal effect correct incorrect

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. For what proposition of law does the decision of the House of Lords in Shogun Finance Ltd v Hudson [2003] UKHL 62; [2004] 1 AC 919 stand as authority?

The distinction between a contract concluded in writing and a contract concluded orally by parties dealing with one another face-to-face is irrelevant when deciding whether or not a contract can be set aside on the ground of mistake. correct incorrect

The courts are more likely to set aside a contract on the ground of mistake where the contract between the parties has been concluded orally in face-to-face dealings than they are where the contract has been concluded in writing. correct incorrect

The courts are more likely to set aside a contract on the ground of mistake where the contract between the parties has been concluded in writing than they are where the contract has been concluded orally between parties dealing with one another face-to-face. correct incorrect

The courts will never set aside a contract on the ground of mistake where the parties have concluded a contract orally in face-to-face dealings. correct incorrect

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. A rogue X, who has done his research, goes to Garage Y and states that he wishes to purchase a new Alpha Romeo and to take it away immediately. He hands over a cheque for the full price. When the employee of Garage Y suggests that he cannot allow him to take the car away in return for a cheque which has not been cleared, X retorts that he is Yo Yamago, the CEO of the chain of Y garages. The employee shows no more resistance and allows him to take away the car on the strength of a £17,750 cheque. The signature is forged and the cheque subsequently bounces. By the time this fraud is discovered, X has sold the car on to another dealer Z for £15,000. Advise Garage Y on their chances of recovery of the car or its value from dealer Z.

The car or its value are definitely irrecoverable. A contract has been concluded, admittedly on the basis of a mistake, which remains valid however until the right to set it aside has been exercised. It is now too late to rescind the contract and recover the car from Z. correct incorrect

The car or its value are unlikely to be recoverable. The contract has been made on the basis of flimsy evidence as to identity and a court is unlikely to conclude that the contract between X and Y is void so as to give Y a right to recover the car from Z. correct incorrect

Garage Y has a good chance of recovering the car or its value. Y simply needs to prove that the mistake as to identity was so fundamental to the contract that consensus ad idem was never reached. correct incorrect

The car or its value are definitely recoverable. Garage Y needs only prove that the mistake was as to identity rather than an attribute of the buyer. correct incorrect

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. Lord Atkin's judgment in Bell v. Lever Brothers [1932] AC 161 has led some to raise the question whether a mistake as to quality (Lord Atkin's third category of possible contractual mistake) can ever render a contract void at common law. Which of the following cases might provide evidence that these commentators are mistaken?

Solle v. Butcher [1950] 1 KB 671 correct incorrect

McRae v. Commonwealth Disposals Commission (1951) 84 CLR 377 correct incorrect

Associated Japanese Bank v. Crédit du Nord SA [1989] 1 WLR 257 correct incorrect

Leaf v. International Galleries [1950] 2 KB 86 correct incorrect

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. Nana sells a sculpture to Ted which they both believe to be by Giacometti. A high price is paid for the work of art. 18 months later, it is discovered that in fact the sculpture is a modern copy. Is Ted entitled to rescind the contract with Nana?

No, Ted is not entitled to rescind the contract with Nana correct incorrect

Yes, Ted is entitled to rescind the contract with Nana correct incorrect

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. Would Lord Denning have disagreed with the outcome of the case in Great Peace Shipping Ltd v. Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407?

Unlikely correct incorrect

Probably correct incorrect

Definitely correct incorrect

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. Where the mistake made by the parties is one that relates not to the making of the contract but to the recording of it, the parties may ask the court to rectify the contract.

True correct incorrect

False correct incorrect

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. One of the requirements for a finding of non est factum is "a radical difference between what [the claimant] signed and what he thought he was signing". Which of the following statements adequately describes the other requirement that must be fulfilled?

The claimant must be unable to have any real understanding of the document correct incorrect

The claimant's mind must be at odds with his pen correct incorrect

The claimant must never have signed the document correct incorrect

The claimant must be blind or illiterate correct incorrect