Chapter 2 Multiple choice questions

. A 'lockout' agreement, preventing a party from negotiating with any third party, even if no time limit is specified for those negotiations, is likely to be upheld by a court as enforceable due to the courts placing an implied duty on a party who had agreed to the lockout to negotiate in good faith with the party to that lockout for a reasonable period of time.

True

False

. The courts are able to imply a term that the price should be a 'reasonable price' whenever the price-fixing mechanism has not been implemented.

True

False

. Which one of the following statements most accurately summarises the decision in Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444?

A contract that fails to fix a price or to provide a price-fixing mechanism is void for uncertainty.

A contract that fails to fix a price but provides a price-fixing mechanism is not void for uncertainty.

Where a contract provides a non-essential price-fixing mechanism and the mechanism fails to work due to the fault of one of the parties in not cooperating, the contract may not be void for uncertainty and the court may order a reasonable price to be paid.

Where a contract provides an integral and essential price-fixing mechanism and the mechanism fails to work due to neither party's fault, the contract may not be void for uncertainty and the court may order a reasonable price to be paid.

. In both Scammell & Nephew Ltd v Ouston [1941] AC 251 and British Steel Corp v Cleveland Bridge & Engineering Co [1984] 1 All ER 504, the contract was held to be void because the parties in both cases had failed to agree upon several essential aspects of the contract.

True

False

. 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

. Which one of the following agreements is probably void because of vagueness or uncertainty?

A partly executed agreement to agree a price from time to time.

An agreement for sale of goods governed by the Sale of Goods Act 1979, which does not fix a price.

An agreement under which a particular person is named to fix the price but when, unknown to both parties, the named person has long been dead.

An agreement of ten-year length, which fixes the price for the first three years and leaves the price unfixed for the remaining seven years.

. Which one of the following statements relating to 'agreement mistake' is true?

The plea of non est factum is generally available where a party who mistakenly signs a contract is illiterate, blind or lacking in understanding.

The remedy of rectification of a written document is available where there is clear evidence that one or more terms agreed upon by both parties are not recorded correctly in the document.

A contract made on the basis of a mistake may not be enforced against the party who has contributed to, or provoked, the mistake.

Where an essential aspect of the contract suffers from a latent ambiguity that cannot be solved objectively, the contract is voidable.

. A, presenting herself as a well-known figure, C, reaches a contract with B over the telephone. 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).

. Which one of the following cases is authority for the principle that cases concerning 'mistake of identity' should be resolved by the application of an objective test, employing the standard rules of offer and acceptance?

Cundy v Lindsay (1877-8) LR 3 App Cas 459.

Phillips v Brooks Ltd [1919] 2 KB 243.

Lewis v Averay [1972] 1 QB 198.

Shogun Finance v Hudson [2003] UKHL 62, [2004] 1 AC 919.

. A owns an internet jewellery business, where goods can only be acquired on hire purchase terms. B clicks on A's website and selects a pearl necklace (valued at £10,000). When asked to choose a 'method of payment', B clicks on the 'Cash' button. In accordance with the conditions of the website, B is prompted to provide the following details: name; address; National Insurance number; bank account details; passport details (note: any 'payment in cash' will only be requested after delivery of the item has taken place). Because B recently burgled C's home, he is able to answer all of the above questions as though he was C. A's website automatically carries out a credit check on C and, satisfied with the answers, the pearl necklace is dispatched to C. B is able to intercept the delivery of the necklace and immediately pawns it to D. Which one of the following statements most accurately reflects A's rights?

Because B has already pawned the necklace to D, A no longer has any right to claim that the contract is void.

Because B knows of A's mistake, the contract cannot be void for unilateral mistake.

The contract between A and B is void and A is entitled to claim the necklace from D, because the contract is in writing and therefore A intends to deal with the named party (C) in the contract.

The contract between A and B is not void and A cannot claim the necklace from D, because the contract was made face to face and the presumption is that A intends to deal with the person who physically accesses his website (B).

Chapter 2 Multiple choice questions

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