Chapter 5 Multiple Choice Questions

. Which one of the following is not a form of contractual formality?

A requirement that a contract be executed by deed

A requirement that a contract be in writing

A requirement that a contract be witnessed and signed by a judge to verify its legality

A requirement that a contract be evidenced in writing

. Which one of the following types of contract is not required to be made in writing?

Agreements regulated by the Consumer Credit Act 1974.

A bill of exchange.

A contract for the sale or disposition of an interest in land.

A contract of guarantee.

. A person's contractual capacity refers to?

The extent to which that person can enter into a legally binding contract.

The number of contracts that person is allowed to enter into.

The formalities that that person must adhere to in order to create a legally binding contract.

The minimum amount of consideration that person must provide in order to create a legally binding contract.

. Regarding the contractual capacity of a minor, which one of the following statements is true?

A minor cannot enter into a legally binding contract, and any such contract is void ab initio.

Minors have full contractual capacity providing that the other party is aware that he is dealing with a minor.

A contract for the purchase of shares is void if the purchase is made by a minor.

Generally, a minor who enters into a contract can enforce the contract against the other party.

. In relation to mental incapacity, which one of the following statements is true?

A contract entered into by a mentally incapacitated person is void if the other party knew of the incapacity.

A mentally incapacitated person can enter into a binding contract for the purchase of necessaries.

A mentally incapacitated person never has capacity to enter into a legally binding contract.

Mentally incapacitated persons are always bound by the contracts they enter into.

. The doctrine of privity of contract states that?

A third party may enforce a contract only if he has an interest in the contract.

A contractual term that imposes obligations on a third party is binding upon that party.

Only parties to a contract may enforce the contract, and the contract only imposes obligations on the parties to it.

Contractual terms are private and a contract will be unenforceable if its terms are revealed to a third party.

. What does s 1(1) of the Contracts (Rights of Third Parties) Act 1999 state?

Section 1(1) states that, subject to the provisions of the Act, a contract can impose obligations on a third party where it is reasonable to do so.

Section 1(1) states that, subject to the provisions of the Act, a third party can enforce a term of a contract if the contract expressly provides that he may, or the term purports to confer a benefit on him.

Section 1(1) states that a third party can enforce a term of a contract where it is reasonable to do so.

Section 1(1) states that a contract can impose an obligation on a third party if the third party consents.

. Which one of the following types of agreement is NOT excluded from the operation of s 1(1)?

Contracts containing a bill of exchange or any other negotiable instrument.

Contracts for the sale of goods.

Contracts that exist between a company and its members by virtue of the company's constitution.

Employment contracts.

. Aside from the provisions of the Contracts (Rights of Third Parties) Act 1999, the law does provide other exceptions to, or ways to avoid, the doctrine of privity. Given this, which one of the following statements is untrue?

The court has a discretion to avoid the doctrine of privity where it feels it is 'just and reasonable' to do so.

Statute can exclude the doctrine of privity and provide exceptions to it.

Parties can avoid the doctrine of privity by bringing a claim in tort.

The doctrine of privity can be avoided if the court is of the opinion that a collateral contract exists between the promisor and a third party.

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