Chapter 5 Multiple-choice questions

. The presumption against legal intention in social and domestic arrangements shows that the courts are generally reluctant to interfere in domestic disputes.

True

False

. Where several family relatives reach an agreement in a domestic environment, it is for the party who denies the existence of a legally binding contract to prove that there is no intention to enter into such a contract.

True

False

. 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.

. Which one of the following statements is false?

In the commercial context, it is always the party denying the binding force of an agreement who shoulders the burden to prove the absence of an intention to create legal relations.

The presumption of a legal intention under a commercial agreement can be rebutted if the agreement clearly states that it is 'binding in honour only'.

Where it is not wholly clear whether or not an agreement is commercial, the courts may sometimes depart from the 'presumption' route and apply a contextual approach to determine the existence of an intention to create legal relations.

An advertisement placed by a store, which promises to give a Goodman TV for free to the first three persons who place an order for an IBM laptop, can be binding.

. Which of the following statements are reasons relied upon by either the majority or the minority of the Court of Appeal in Jones v Padavatton [1969] 1 WLR 328 in reaching their final conclusion that the agreement between the mother and the daughter was not enforceable? [Please select all that apply.]

Although the agreement was intended to be binding, it was only to last for a reasonable period of time and this period had expired.

The daughter had relied upon the agreement to her detriment.

The agreement was a trivial agreement made between family members.

The terms of the agreement were not sufficiently certain.

. A domestic agreement is more likely to be enforced by the courts if it relates to a serious matter and is executed.

True

False

. An uncle promises his nephew to pay his university fees 'as long as I can manage it' if the nephew achieves a certain score in his A-Level exams. The nephew reaches the prescribed score in his A-Levels and, on the strength of the uncle's promise, buys a new car. Which one of the following statements is true?

The uncle is bound by the promise because the agreement between the two parties should be regarded as a commercial one.

The uncle is not bound by the promise because the language of the promise is not sufficiently certain.

The uncle is bound by the promise because the nephew has relied upon the promise.

The uncle is not bound by the promise because an agreement made in a domestic context is not enforceable.

. In Kleinwort Benson Ltd v Malaysia Mining Corp [1989] 1 WLR, a 'letter of comfort' was held not to be binding on the ground that the presumption of an intention to create legal relations was rebutted by the wording of the letter.

True

False

. 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 formality requirements for a binding contract is true?

The law requires that all contracts must be put in writing.

A contract for the sale or disposition of an interest in land becomes enforceable once it is put in writing, even if no consideration is supplied.

A contract that fails to comply with a statutory formality requirement is unenforceable.

An oral contract of guarantee is unenforceable because of lack of writing.

. Which one of the following statements in relation to a contract entered into by a minor is true?

Where a bank is induced by a minor's misrepresentation as to his age to enter into a loan contract, the bank can recover the money loaned to the minor.

A contract made by a minor normally binds the other party but the other party is entitled to recover property transferred to the minor under the contract on a restitutionary basis.

A minor is not bound by a contract of employment or apprenticeship if the contract is unduly burdensome or wholly executory.

Where a minor enters into a contract to acquire shares in a company, the contract automatically becomes valid when the minor attains majority, if the minor does not repudiate it at that time or avoid it at any time before.

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