Chapter 3 Multiple choice questions

. A contacts B, a friend, by telephone and asks him out to lunch adding that she (A) will pay. B agrees to meet A, saying that he (B) will pay for the wine. B arrives at the agreed restaurant the next day but A telephones to say that she must cancel the arrangement because of an urgent business meeting. B, who is a self-employed financial consultant, has taken a day off work for the lunch and, because he has lost a day's earnings as a consequence of A's cancellation, he seeks some redress (even if this is simply payment for his meal). Which one of these statements most accurately summarises the legal position?

A and B have a contract because both parties furnish valid consideration.

Because A and B are businesspeople, there is a presumption of intention to create legal relations in this contract and so it is a binding contract.

There is a presumption that legal relations are not intended in social agreements of this nature.

A is estopped from refusing to pay for B's meal.

. A husband divorces his wife and then promises to 'maintain' her, provided she takes good care of their only child and keeps the child happy. Later, the husband changes his mind and refuses to provide any maintenance to the wife. The wife then seeks to enforce the promise. Which one of the following statements most accurately summarises the position between the two?

The promise is unenforceable because it is not supported by valid consideration, since the wife has a legal duty to take care of their child.

The promise is enforceable because it is supported by valid consideration and the husband clearly intends to be bound.

The promise is unenforceable because there is a presumption against legal intention and the wife would not be able to rebut it.

The promise is enforceable because, although there is a presumption against legal intention, the wife would be able to rebut the presumption by proving that she has relied upon the promise.

. Which one of the following statements relating to the decision in Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 is not true?

The court did not make reference to Foakes v Beer (1884) 9 App Cas 605 as part of its decision.

The court held that consideration is not required for an alteration promise to be enforceable, provided there is evidence of reliance.

The court held that consideration could be found through a factual (or practical) benefit in the context of alteration promises to pay more.

The court did not overrule Stilk v Myrick 170 ER 1168, (1809) 2 Camp 317.

. Which one of the following statements relating to the doctrine of promissory estoppel is true?

The English courts allow promissory estoppel to be used to create a contract where there is no consideration to support a formation promise.

Promissory estoppel requires detrimental reliance by the promisee of the promise.

Promissory estoppel does not give rise to a new cause of action capable of creating fresh rights.

Promissory estoppel has only a suspensory effect and cannot extinguish any legal rights.

. A employs B as a consultant in her 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 an additional £8,000 to B 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 her mind and refuses to pay the extra £8,000 to B. Which one of the following statements most accurately summarises the legal position?

A is estopped from changing her mind but she 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.

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

On 1 February, A enters into a contract with B by which B is to complete certain building work on A's premises in return for a payment of £10,000. The parties agree the work must be completed by 1 May, in time for A's grand opening of her new shop. Four weeks prior to the agreed completion date, B realises it is unlikely to complete the work on time and so A promises an extra £1,000 to enable B to source additional labour. B completes the work on time, but A refuses to pay the additional £1,000.

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 her mind and demands the balance from B.

. B has agreed to employ A to deliver and erect a conservatory at an all-inclusive price of £10,000. Midway through the performance of his contractual obligations, A informs B that his business is facing financial difficulties and he will be unable to complete the work he is contracted to complete. B agrees to pay an extra £5,000 to A if A completes the work because she has just found a buyer (X) for her house who wants to move in quickly. On completion, A receives £10,000 from B but claims the extra £5,000. B refuses to pay on the grounds that A has not provided any consideration for the additional payment. Which one of the following statements is the most likely to be true?

A was probably only performing his contractual duty, so he has not provided any extra consideration for the £5,000.

A exceeded his contractual duty and is therefore entitled to the extra £5,000.

B is estopped from going back on her words and is bound to pay the extra £5,000.

A is probably entitled to the extra £5,000 because B has derived a practical benefit from the new arrangement.

. A employs B to paint the outside walls of her house for the sum of £2,300. When B completes the painting, A refuses to pay him because she is suffering from 'liquidity problems'. One month later, A wins a local lottery competition. She contacts B by telephone and tells him that she will pay the outstanding £2,300 provided B also paints the window frames at the front of the house for an additional £100. B agrees and paints the frames. A now refuses to pay B more than the original £2,300. Which one of these statements most accurately summarises the legal position?

B is only entitled to £2,300 because otherwise A would infringe the principle incorporated in Foakes v Beer (1884) 9 App Cas 605.

B is entitled to full payment (£2,300 plus £100) because, by painting the window frames, B has gone beyond his existing contractual duty.

B is only entitled to £100 because the previous painting of A's house is past consideration and cannot therefore be used as justification for the payment of the £2,300.

B is entitled to full payment (£2,300 plus £100) because A has received a practical benefit in the shape of her newly painted window frames.

. A is B's landlord. A offers to reduce the rent to B for six months because B is in financial difficulties. B is very pleased and pays the reduced rent for two months. At this point, A demands full payment of rent for those two months because B has won a large amount of money on the National Lottery. Which one of the following statements most accurately summarises the legal position between A and B?

B must pay A the full rent for all six months because the reason for reducing the rent no longer exists.

B has provided sufficient consideration for A's promise to reduce the rent and is therefore entitled to refuse A's request.

A is estopped from going back on his words and is bound to accept the reduced rent until completion of the six months.

A can return to the original contract and claim full rent for the future after a reasonable period following the demand, but is unable to recover the extra rent for any time before that period elapses.

. A owes B £10,000. With the knowledge that B has run into some financial problems, A starts to pressurise B to agree to a reduction of the debt. B finally agrees to accept £8,000 in full satisfaction of the debt. B receives £8,000 from A and now brings an action to claim the balance. Which one of the following statements most accurately summarises the legal position?

B is not entitled to the balance, because B has received some practical benefit from the payment of £8,000.

B is entitled to the balance, because B's promise is not supported by a valid consideration and, in any event, B may be entitled to the balance if able to prove that the promise is made under duress.

B is not entitled to the balance, because B is estopped from revoking the promise to accept £8,000 in full satisfaction of the whole debt.

B is not entitled to the balance because of the past consideration rule.

Chapter 3 Multiple choice questions

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