Diagnostic test

. Chapter 1. According to the Court of Appeal in Pharmaceutical Society of GB v Boots [1953] 1 QB 401, which one of the following statements most accurately describes the normal process of contract formation in a self-service shop?

The display of goods is an offer and the customer accepts that offer by placing the goods into the shopping basket/trolley.

The customer makes an offer by placing the goods into their shopping basket/trolley and the cashier accepts that offer by ringing up the price of the goods on the cash register (or passing the goods over the barcode reader).

The customer makes an offer by taking the goods to the checkout and the cashier accepts that offer by ringing them up on the cash register.

The display of goods is an offer and the customer accepts that offer when they take the goods to the checkout.

. Chapter 1. A Ltd sends a brochure to B, which prices a certain type of mountain bike at £250. B replies: 'I am prepared to pay £240 in cash for the mountain bike.' Which one of the following statements is true?

B's reply constitutes a counter-offer.

B's reply constitutes an acceptance of A's offer.

B's reply constitutes an offer.

B's reply constitutes a request for information.

. Chapter 2. Where an inessential term of the contract suffers from vagueness, it may be possible to sever that term and enforce the rest of the contract.

True

False

. Chapter 2. A, presenting himself as a well-known figure, C, reaches a contract with B over the phone. B believes that he is contracting with C. When B later discovers the fraud, he claims that the contract is void for his mistake as to the other party's identity but he is unsure which legal authority he should cite. Which one of the following pieces of advice given to B is true?

According to Cundy v Lindsay (1878) 3 App Cas 459, the contract is void because A's identity is crucially important and B only intends to deal with C.

According to Lewis v Averay [1972] 1 QB 198, the contract is not void, because B intended to deal with the person at the other end of the line (A).

According to Shogun Finance v Hudson [2003] UKHL 62, [2004] 1 AC 919, the contract is void because B intended to deal only with the person identified in the telephone conversations (C).

According to King's Norton Metal Co Ltd v Edridge, Merrett & Co (1897) 14 TLR 98, the contract is not void, because B intended to deal with the person at the other end of the line (A).

. Chapter 3. A employs B as a consultant in his firm. B is paid £15,000 plus a 'discretionary bonus'. Over the past year, A's firm has doubled its profits and therefore A decides to pay B an additional £8,000 for 'all of your help and hard work throughout the past year'. B is delighted and buys a new car in anticipation of the extra money being given to him. Subsequently, A changes his mind and refuses to pay B the extra £8,000. Which one of the following statements most accurately summarises the legal position?

A is estopped from changing his mind but he can, on giving reasonable notice, return to the original contract and rely on the fixed annual salary clause.

A's promise is unclear and therefore unenforceable.

B has not provided valid consideration for the additional £8,000 because the promise refers exclusively to his performance over the past year, which amounts to a 'past consideration' only.

B can claim the extra £8,000 because he was carrying out A's instructions over the past year and it was reasonable for him to have expected this extra payment in the light of the 'discretionary bonus' clause in his contract.

. Chapter 3. In which one of the following situations is the promise in question unlikely to be supported by a valid consideration?

A enters into a contract with B under which A is to deliver the goods to B by 1 June. Subsequently, the market conditions change dramatically and many clients of B who have entered into similar contracts now seek to cancel contracts or to postpone delivery dates. B promises A to pay £1,000 more provided A makes the delivery by 1 June. A makes the delivery by 1 June.

B owes £500 to A. A agrees to accept a horse belonging to B in full satisfaction of the debt. B delivers the horse to A.

B employs A to carry out decoration work. Whilst carrying out the work, A realises that he is short of money and therefore asks B for an increase in the contract price. B agrees to pay an extra £5,000 provided A completes his work a day earlier than originally agreed. A completes his work a day earlier than originally agreed.

B owes a debt of £2,000 to be payable to A on 1 June. B has encountered some financial difficulties and asks A if A will instead accept £1,800 on 1 June. A agrees to accept £1,800 and payment is made. A then changes his mind and demands the balance from B.

. Chapter 4. In to order successfully enforce a contract according to the Contracts (Rights of Third Parties) Act 1999, a third party must show that it has provided consideration under the contract.

True

False

. Chapter 4. The general rule is that the promisee is not entitled to substantial damages if it suffers no loss from the breach, but this general rule is subject to exceptions. In which of the following circumstances is the promisee (B) unlikely to recover substantial damages on behalf of a third party (C) from the promisor (A)? [Please select all that apply.]

B employs A to carry out work on B's property and, at the time of contracting, A knows that the property is to be transferred to C when the work is completed. Due to A's negligence, the work is defective and causes damage to the property.

A says to C that, if C lets A carry out work on a property to be acquired by C from B in the near future, C guarantees that the work will be of satisfactory quality. C asks B to employ A to carry out the work and B does so. Due to A's negligence, the work is defective and causes damage to the property.

B employs A to carry out work on C's property and, at the time of contracting, A knows that the property belongs to C and that B will shortly assign his rights under the contract to C. B does so. Due to A's negligence, the work is defective and causes damage to the property.

B employs A to carry out work on B's property and, at the time of contracting, A does not know that the property is to be transferred to C when the work is completed. Due to A's negligence, the work is defective and causes damage to the property.

. Chapter 5. 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.

. Chapter 5. 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 6. The party seeking to challenge the effectiveness of an exemption clause has the burden of establishing that the clause has not been incorporated into the contract and does not cover the other (breaching) party's liability in issue.

True

False

. Chapter 6. A was travelling abroad for business purposes and hired a car from B company. The contract of hire exempted B from liability for 'any losses or damage suffered by the hirers, whether caused by our company's neglect or fault or not'. At the time of contracting, A made it clear that he wanted to leave his personal belongings in the car from time to time and B expressed no objection. When A parked the car outside a cinema, his personal belongings left in the car were stolen. It was discovered that this was solely attributed to the negligence of one of B's staff, who failed to repair the defective back door of the car. One of the legal questions arising from this case was whether the exemption clause covered B's negligence liability for the lost property. Which one of the following statements is probably true in respect of this legal question?

The clause did not cover B's negligence liability, because the word 'negligence' was not used.

The clause did cover B's negligence liability because the words used in that clause were wide enough to cover such liability.

The clause did cover B's negligence liability because the word 'neglect' used in that clause was a synonym of negligence.

The clause did not cover B's liability for negligence, because negligence was not the only ground of B's liability for the lost property.

. Chapter 7. The purpose of awarding contractual damages is generally to put the non-breaching party into the position it would have been in had the contract been performed as agreed.

True

False

. Chapter 7. A agrees to repair B's broken mill shaft and to return it to B within a week. At the time of contracting, B points out that he has no spare mill shaft and that he will not be able to operate his mill until the repaired one has been returned. A does not return the repaired shaft until two weeks later. B sues A for breach of contract, claiming damages for the loss of profit during the second week, when his mill was closed as a result of A's delay. A argues that the damages claimed by B are too remote to be recoverable. Which one of the following statements concerning A's argument is true?

The damages claimed by B are not too remote, because his loss of profit is a natural or normal loss resulting from A's breach of contract.

The damages claimed by B are too remote, because his loss of profit is an abnormal loss resulting from A's breach of contract.

The damages claimed by B are too remote, because his loss of profit is not within the reasonable contemplation of the parties at the time of contracting.

The damages claimed by B are not too remote, because his loss of profit is an abnormal loss within the parties' actual knowledge at the time of contracting.

. Chapter 8. A enters into two similar contracts with C and D to import certain machinery. The importation of the machinery requires a licence from the government of A's country. In the contract with C, A guarantees to obtain a licence, whilst no such guarantee is given in the contract with D. A applies for two licences for the importation of the machinery but only one licence is granted. A allocates the licence to the contract with C and claims that the contract with D is frustrated. Which one of the following statements most accurately summarises the legal position between A and D?

The contract has not been frustrated, because the unavailability of the licence is not due to any breach of contract by A.

The contract has been frustrated, because the allocation by A of the only licence to the other contract aims to avoid a breach of that contract by A and is thus reasonable.

The contract has not been frustrated, because the unavailability of licence is due to A's allocation of the only licence to the other contract.

The contract has been frustrated, because the contract has not expressly allocated the risk of failure to obtain the licence to A.

. Chapter 8. Which of the following statements concerning the relationship between the doctrine of common mistake and the doctrine of frustration are true? [Please select all that apply.]

Whereas common mistake applies to initial impossibility, a frustrating event can only occur after the contract was entered into.

Common mistake renders a contract void, whilst frustration only renders it voidable.

Where payment has been made under the contract, common mistake enables the payor to recover the money; frustration does not.

The test applied to both common mistake and frustration is one of impossibility.

. Chapter 9. Which of the following principles were recognised and applied by the Court of Appeal in Edgington v Fitzmaurice (1885) 24 ChD 459? [Please select all that apply.]

In order to be actionable, a misrepresentation must be the only factor to have contributed to the decision to enter into the contract.

A false statement of a present intention is a misstatement of fact.

A fraudulent misrepresentation induces a contract, even if it is not the only factor to have contributed to the decision to enter into the contract.

A misstatement of intention does not amount to an actionable misrepresentation.

. Chapter 9. Which one of the following statements in relation to the three types of misrepresentation is true?

A misrepresentation is fraudulent if the misrepresentor, when making the misrepresentation, has no reasonable ground to believe that the statement is true.

To claim damages on the ground that a misrepresentation is negligent, the misrepresentee must prove the existence of a special relationship between the misrepresentor and the misrepresentee.

An innocent misrepresentation does not give the misrepresentee a right of rescission; it is a matter of the court's discretion whether the misrepresentee has such a right.

A change of circumstances misrepresentation will entitle the misrepresentee to claim damages under the Misrepresentation Act 1967.

. Chapter 10. Which one of the following statements in relation to 'actual undue influence' is true?

The party seeking to rely upon actual undue influence must show that there is a relationship of trust and confidence between him/her and the other party.

The party seeking to rely upon actual undue influence must show that there is a manifest disadvantage resulting from the contract.

The party seeking to rely upon actual undue influence must show that his/her free will to enter or to decline the contract has been overcome by the influence of the other party.

An action for actual undue influence will fail if it is shown that the party seeking to rely upon actual undue influence would have entered the contract anyway.

. Chapter 10. In a case of evidential undue influence, the defendant may avoid a finding that the influence is undue by showing that there is no intention to commit a wrong or bad faith on its part.