Chapter 8 Multiple choice questions

. A owns a tanker that has suffered a massive engine explosion. A finds out from an independent source that a ship owned by B is the closest vessel to the stricken tanker. B agrees to divert his vessel in order to render assistance to the crew of A's tanker, provided A will agree to a minimum hire charge of £50,000, 'irrespective of whether B's vessel is used or not'. A accepts B's offer but finds out within minutes that his tanker has already sunk with the loss of all hands. Which one of the following statements most accurately represents the legal position of A?

A is not bound to pay any hire charge because the contract is probably void for common mistake.

A is not bound to pay any hire charge because the contract is voidable for common mistake.

A is not bound to pay the hire charge because A's obligations under the contract are subject to an implied condition precedent that A's tanker was afloat at the time when A and B entered into the contract.

A is probably bound to pay the hire charge because the contract has allocated to A the risk of the tanker sinking.

. A, a dealer in antiques, places a painting in her shop window priced at £10,000. A thinks that the painting may be by Arthur Frier, a local artist whose paintings are now being sought by professional collectors, but as she is not certain of the painter's identity, she decides not to place any label on the painting. B enters the shop and says: 'That looks like a Frier to me, I'll take it.' A does not reply. B pays the price of £10,000 in cash. B now discovers that the painting is not by Frier and seeks a full refund. Which one of the following statements most accurately summarises the legal position?

A and B have made a common mistake regarding the subject matter of the contract. The contract is void and A must refund B.

The contract is probably valid on grounds of caveat emptor (buyer takes the risk). A neither contributed to B's mistake nor made any misrepresentation.

A is liable to refund B because A has probably taken the risk by remaining silent.

A is liable to refund B, if B rescinds the contract, because the contract is probably voidable according to the decision in Solle v Butcher [1950] 1 KB 671.

. Which one of the following statements is inconsistent with the decision in Couturier v Hastie (1856) 5 HL 673?

This case concerned a contract for the sale of specific goods.

The decision might also be explained by the doctrine of frustration because the cargo was resold after it had been shipped.

The seller's claim for the contract price was rejected on the ground that the contract was void because of common mistake.

Had the buyer brought an action for damages, the seller might have been liable for breach of contract.

. Which one of the following statements concerning the decision of the House of Lords in Bell v Lever Brothers Ltd [1932] AC 161 is true?

The House laid down a more relaxed test of 'essential difference' than the test of impossibility.

The House laid down a test of 'essential difference' and construed it very narrowly.

The case related to a common mistake as to ownership (res sua).

The case had nothing to do with common mistake as to the quality of the subject matter.

. A wins a prize, giving her free entry to the next England v France rugby international, and decides to travel to London by coach to watch the match. She purchases a day return coach ticket from B Ltd. Unfortunately, the rugby match is cancelled owing to a freak storm. A no longer needs her coach ticket and therefore claims that her contract with B Ltd has been frustrated. Which one of the following statements most accurately summarises the legal position between A and B Ltd?

The contract has been frustrated on grounds of impossibility because there is no rugby match for A to attend.

The contract has been frustrated because A's sole purpose of entering the contract, which is to watch the rugby match, has been destroyed.

The contract has not been frustrated because the rugby match does not form the common purpose of the parties.

The contract has not been frustrated because A will gain a valuable benefit from travelling to London.

. A agrees to make a new kitchen table and six chairs for B, at a cost of £2,000 payable on completion. A purchases the materials for £500 and soon completes the table, which he delivers to B. At this point, A's workshop is completely destroyed and A is severely injured. A is physically incapable of completing his contract with B. It is agreed that the contract has been frustrated. Which one of the following statements most accurately summarises the rights that A possesses under the Law Reform (Frustrated Contracts) Act 1943?

A can claim his expenses of £500, subject to the court's discretion, and a reasonable sum of money representing the value of the table received by B.

A can claim his expenses of £500, subject to the court's discretion, but he cannot claim any money for the table received by B.

A cannot claim his expenses of £500, nor any money for the table received by B.

A cannot claim his expenses of £500 but he can claim a reasonable sum of money representing the value of the table received by B.

. In Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407, [2003] QB 679 the Court of Appeal followed its own previous decision in Solle v Butcher [1950] 1 KB 671 and held that there was a (wider) equitable jurisdiction to set aside the contract on terms for mistake as to quality.

True

False

. A booked a room at B's hotel for the weekend of 12 May, agreeing to make a 10 per cent deposit immediately. They agreed that the deposit would be forfeited only should A cancel the booking without good reason. On the weekend in question, B ensures that there is clean linen, toiletries and a well-stocked mini-bar available in the room allocated to A. Unfortunately, owing to floods, all roads to the hotel are impassable. A and B agree that the booking contract has been frustrated but both are now disputing the question whether the 10 per cent deposit is repayable or not. Which one of the following statements is probably true?

A is automatically entitled to the return of her deposit.

The court may allow B to retain a sum of money representing the expenses incurred for preparing the room, before returning the remainder of the deposit to A.

A automatically forfeits her deposit.

B has a right to deduct any of its expenses for preparing the room, before returning the remainder of the deposit to A.

. 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.

. Which one of the following statements concerning the relationship between the doctrine of common mistake and the doctrine of frustration is true?

Whereas common mistake applies to subsequent impossibility, a frustrating event can only occur before 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 8 Multiple choice questions

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