Chapter 3 Multiple-choice questions

. Where two parties enter into negotiations 'subject to contract' and a contract fails to materialise, it is generally possible for a party to recover expenses incurred on the ground of unjust enrichment.

True

False

. A 'lock-out' agreement which prevents a party from negotiating with any third party for a specific period of time is always void for uncertainty.

True

False

. 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.

. 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

. An express provision requiring the parties to negotiate in good faith is generally not enforced under English law.

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.

. 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 (N.B. 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 supply all the above details 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 that physically accessed his website (B).

. 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 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.

. In which one of the following cases was it held that the contract might not be enforceable because one of the parties knew, or should have known, the other party's mistake and failed to draw it to the other party's attention at the time when the contract was made?

Smith v Hughes (1871) LR 6 QB 597.

Scriven Bros & Co v Hindley & Co [1913] 3 KB 564.

Hartog v Colin & Shields [1939] 3 All ER 566.

Centrovincial Estates plc v Merchant Investors Assurance Company Ltd [1983] Com LR 158.

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

According to Ingram v Little [1961] 1 QB 31, the contract is void because B intended to deal only with the person with whom she believed she was dealing (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).

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