Chapter 5 Self-test questions

. Jimmy Jeanz is a famous brand of jeans. It has a contract to supply a retailer, House of Jeans, with stock of its jeans. In a sale of goods contract of this type, the jeans must be of satisfactory quality (SGA 1979, s. 14(2)). Which one of the following statements is a correct application of this provision?

House of Jeans can return any jeans and claim a full refund if it struggles to sell the Jimmy Jeanz jeans in its shops due to low demand.

House of Jeans can return a faulty pair of jeans even if that defect has been brought to its attention at the time of the sale and a lower sale price has been agreed.

If the colour of the jeans fades after only one washing, the seller has the right either to give a full refund or to issue a credit note.

If all the zippers in a batch of 100 jeans are broken, House of Jeans is entitled to return all these jeans and claim a full refund.

. Where a statement made by one party before the conclusion of the contract is found to be untrue, the innocent party's remedies may vary according to whether the statement is characterized as a term or a representation. If the statement is characterized as a term, which one of the following assertions relating to the innocent party's remedies is true?

The innocent party may terminate the contract.

The innocent party is not entitled to claim damages unless it proves the misstating party's fault.

The innocent party is generally entitled to damages for expectation losses.

The innocent party may recover all those losses that are directly caused by the misstating party.

. Which of the following approaches might be applied by the courts post Marks & Spencer plc v BNP Paribas Securities Services Trust Co. (Jersey) Ltd [2015] UKSC 72, [2016] AC 742 in connection with the implication of a term in fact into a contract? [Please select all that apply.]

A term can be implied if the parties would have definitely agreed upon it had they been asked about it by an officious bystander at the time of contracting.

It will often be appropriate for a court to first construe the express words of a contract before considering whether a term should be implied.

A term will be implied into a commercial contract whenever the court considers it fair to do so.

An appropriate question to ask is whether the implication of a term would give "business efficacy" to the contract.

. A, the owner of a large chain of off-licences, wishes to purchase 100,000 bottles of Liebzig white wine from B, a wine wholesaler. A states his particular wish to purchase wine of a 2007 vintage because this appears to offer the best mix of quality and value. In B's opinion, the wine is of the correct vintage but, as there are no labels on the bottles, he advises A to verify this fact independently. A purchases the wine but subsequently discovers that the wine was produced in 2009, an inferior vintage. A and B cannot agree whether the vintage of the wine was a term of the contract. Which one of the following statements probably summarises the legal position between the parties?

The vintage is a term of the contract because A has clearly attached special importance to that issue.

Because B tells A to verify the vintage independently, it is clear that there is no intention that the vintage would be a term of the contract.

The vintage is a term of the contract because this is a condition precedent for the contract to come into existence.

The vintage is not a term of the contract because A and B are equally experienced and knowledgeable on such issues.

. The distinction between strict and qualified contractual obligations is that the former is an obligation to achieve a guaranteed result, while the latter is an obligation to exercise reasonable care and skill.

True

False

. A breach of contract occurs when the time for performing a duty under the contract arrives and that duty is not performed. Which one of the following statements correctly describes the legal consequence of a breach of contract?

Every breach of contract makes the contract-breaker liable to pay damages to the non-breaching party.

Every breach of contract entitles the non-breaching party to terminate the contract.

A breach of contract can automatically bring the contract to an end.

The contract-breaker is not liable to pay damages if the non-breaching party sustains no loss from the breach.

. Which one of the following statements most accurately describes the legal effects of a repudiatory breach by one of the parties to the contract?

The breach will not affect the subsistence of any exemption or arbitration clauses in the contract.

If the non-breaching party elects to affirm the contract, the breach will cause the secondary obligation to pay damages as compensation to accrue.

The breach will terminate the primary obligations of the contract.

The breach will not cause the secondary obligation to pay damages as compensation to accrue until the non-breaching party elects to accept the breach.

. Which one of the following statements most accurately summarises the decision in L Schuler A-G v Wickman Machine Tools Sales Ltd [1974] AC 235?

Whether a right of termination arises from a breach of an innominate term depends on whether the effects of the breach will deprive the innocent party of substantially the whole of the benefit that it was intended that he should obtain from the contract.

The parties are free to classify any term as a condition so that any breach of the term will give rise to a right to terminate the contract.

A term may not be recognised as a condition if the parties could not have contemplated it as having the effect of a condition, even if the parties expressly use the word 'condition' to describe the term.

A time stipulation in a commercial contract is always treated as a condition, even if the parties do not expressly classify it as such.

. On 1 June, A contracts to sell a quantity of goods to B to be delivered by 1 July. On 15 June, as A is still making arrangements for the shipment of the goods, he receives a fax message from B stating that the goods are no longer wanted. Which one of the following statements concerning A's rights is true?

A is not entitled to terminate the contract or to claim damages until 1 July.

A is entitled to claim damages immediately but is not entitled to terminate the contract until 1 July.

A is entitled to terminate the contract and claim damages immediately.

A is entitled to terminate the contract immediately but is not entitled to claim damages until 1 July.

. A Ltd enters a contract with B Ltd, under which B Ltd is to develop a software product specifically tailored for A Ltd for a fixed price. Before B Ltd starts the development or incurs any expense under the contract, A Ltd cancels the contract, alleging a fundamental change of its business strategy. B Ltd ignores A Ltd's cancellation and continues to complete the development of the software. Supposing the performance of the contract will not enhance B Ltd's reputation, which of the following statements most accurately summarise the legal position between the parties? [Please select all that apply.]

B Ltd is entitled to the contract price because it may freely decide whether to terminate or to affirm the contract following A Ltd's anticipatory breach.

B Ltd is bound to terminate the contract following A Ltd's anticipatory breach because B Ltd has no legitimate interest in affirming the contract and continuing its performance.

B Ltd is not entitled to the contract price because it cannot complete its performance of the contract without the cooperation of A Ltd.

B Ltd is entitled to the contract price because its performance of the contract does not require the cooperation of A Ltd.

Chapter 5 Self-test questions

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