Chapter 7 Multiple Choice Questions

. It is vital to be able to distinguish between terms and mere representations. In relation to this, which one of the following statements is true?

Generally, statements of opinion tend not to amount to representations or terms of the contract.

If a party makes a representation that turns out to be untrue, the other party can obtain a remedy by commencing an action for breach of contract.

When determining whether or not a statement amounts to a term or representation, the courts will examine the subjective intentions of the parties.

The importance of the statement is irrelevant in determining whether it is a term or a representation.

. When determining whether a statement is a term or a mere representation, the court will take into account a number of factors. Which one of the following is NOT a relevant factor?

The timing of the statement

The importance of the statement

The knowledge of the parties

The complexity and length of the statement

. Which one of the following statements correctly describes the difference between express and implied terms?

Express terms are regarded as conditions, breach of which allows the innocent party to terminate the contract. Conversely, implied terms are regarded as warranties only, permitting the innocent party to recover damages only.

Express terms are in writing, whereas implied terms usually derive from oral negotiations.

Express terms are more important than implied terms.

Express terms are terms that the parties have specifically negotiated should form part of the contract. Implied terms are terms added to the contract by the law or based upon the facts of the case.

. Elen enters into a contract with Simon. She signs the contract, but does not read its terms. Simon performs the contract negligently, but points to an exclusion clause that excludes his liability for negligence. Elen states that she knows nothing about this clause. Based on the information provided, can Simon rely on the exclusion clause?

Yes

No

. Georgina enters into a contract with Claire, but does not sign any document. At the time they agree to enter into the contract, Claire provides Georgina with a copy of the terms that will govern the contract. Georgina does not read them. A day later, Georgina discovers a limitation clause in the contract and claims that it is not part of the contract and cannot be relied on. Is Georgina correct?

Yes

No

. What is the parol evidence rule?

The parol evidence rule provides that a party may never adduce evidence that seeks to add to, vary or contradict the content of a written document.

The parol evidence rule presumes that a written document contains all the terms of a contract, but there are situations where this presumption can be rebutted and a party will be permitted to adduce evidence that adds to, varies or contradicts the content of a written document.

The parol evidence rule provides that parties are free to adduce evidence that seeks to add to, vary or contradict a written document.

The parol evidence rule provides that an oral contract is not usually binding.

. The parol evidence rule is not absolute and is subject to a number of exceptions and qualifications. Which one of the following is not a valid exception or qualification?

The courts will always allow extrinsic evidence to be adduced if the contract is contained in a deed.

Where the court is of the opinion that the written agreement was not intended to represent the full extent of the agreement between the parties.

Where the contract contains implied terms.

Where there is evidence casting doubt on the validity of the contract.

. There are various sources of implied terms. Regarding the implication of terms, which one of the following statements is untrue?

Terms may be implied into a contract based on a particular trade usage or custom.

Terms may be implied into a contract by statute.

Terms may be implied by the court based upon the facts of the case.

Terms may be implied into a contract if the parties have dealt with each other once before.

. There are several differences between terms implied in fact and terms implied in law. Which one of the following statements provides a valid difference between the two types of implied terms?

Terms implied in fact are based on the imputed intentions of the parties, whereas terms implied in law are not based on the intentions of the parties.

Terms implied in fact are not subject to the parol evidence rule, whereas terms implied in law are.

Where the court implied a term in fact, a precedent will be created so that a similar term will be implied into all similar contracts. Such a precedent is not set where a term is implied in law.

Terms implied in law are always implied by statute, whereas terms implied in fact are implied by the courts.

. Which one of the following is not a principle of Lord Hoffmann's restatement?

The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. Accordingly, the courts should interpret the terms of a contract based solely on the words contained within it.

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent.

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words.

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