Chapter 3 Multiple Choice Questions

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. Thomas promises his brother that he will clean his car if he lends him his football boots.

The law presumes that there is no intention to create a legal relationship. correct incorrect

The law presumes that there is no intention to create a legal relationship, but this will be rebutted because of the importance of football as the national sport. correct incorrect

The law presumes that there is an intention to create a legal relationship because siblings so rarely agree that they must really mean it when they do. correct incorrect

The law presumes that there is an intention to create a legal relationship because the promises were bargained for, demonstrating that they were intended to be binding. correct incorrect

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. Which of the following statements are true in relation to the House of Lords' decision in Walford v Miles (1992)? Please select all that apply.

There were two express agreements: an agreement that the seller would not negotiate with other parties; and an agreement that it would negotiate with the buyer in good faith. correct incorrect

The agreement to negotiate in good faith was uncertain and void, because it is an intrinsic part of negotiations that a party is allowed to leave for any reason he chooses. correct incorrect

The agreement to negotiate in good faith was certain and enforceable because there are obvious examples of bad faith negotiation, making it easy to establish whether a party has negotiated in good faith. correct incorrect

The agreement not to negotiate with any other party was uncertain and void, because it was not limited in time and it was impossible to assess a reasonable time limit for exclusive negotiations with the buyer to continue. correct incorrect

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. In Scammell v Ouston (1941), the words 'hire purchase terms' were sufficiently certain.

True correct incorrect

False correct incorrect

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. An agreement that neither party has yet performed is know as an ……… agreement.

Your response

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. Match the extract to the statutory provision.

'The price in a contract of sale may be fixed by the contract or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealings between the parties.'

Section 9(2), Sale of Goods Act 1979. Section 8(1), Sale of Goods Act 1979. Section 9(1), Sale of Goods Act 1979. Section 8(3), Sale of Goods Act 1979.

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'What is a reasonable price is a question of fact dependent on the circumstances of each individual case.'

Section 9(1), Sale of Goods Act 1979. Section 8(1), Sale of Goods Act 1979. Section 8(3), Sale of Goods Act 1979. Section 9(2), Sale of Goods Act 1979.

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'Where there is an agreement to sell goods on terms that are to be fixed by the valuation of a third party, and he cannot or does not make the valuation, the agreement is avoided; but if the goods or any part of them have been delivered to and appropriated by the buyer he must pay a reasonable price for them.'

Section 9(1), Sale of Goods Act 1979. Section 8(1), Sale of Goods Act 1979. Section 8(3), Sale of Goods Act 1979. Section 9(2), Sale of Goods Act 1979.

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'Where the third party is prevented from making the valuation by the fault of the seller or buyer, the party not at fault may maintain an action for damages against the party at fault.'

Section 8(1), Sale of Goods Act 1979. Section 8(3), Sale of Goods Act 1979. Section 9(1), Sale of Goods Act 1979. Section 9(2), Sale of Goods Act 1979.

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. The contract in May & Butcher v R (1934) was:

void, because the price was to be agreed by the parties in the future and so the agreement was incomplete and uncertain. correct incorrect

void, because the price was to be set by a third-party expert and so the agreement was incomplete and uncertain. correct incorrect

enforceable, because s. 8 of SoGA 1979 implies a reasonable price where the parties have not set a price themselves. correct incorrect

enforceable, because the common law presumes that the parties intended to pay a reasonable price in the absence of an express provision related to the price. correct incorrect

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. A comfort letter is? Please select all that apply.

legally binding on the parent company giving it. correct incorrect

not legally binding on the parent company giving it. correct incorrect

a waste of paper and completely useless. correct incorrect

given to reassure a lender that it will receive its money back. correct incorrect

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. The presumption that domestic parties do not intend to create legal relations between themselves is limited to agreements between husband and wife.

True correct incorrect

False correct incorrect

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. Where the price in a contract for the sale of goods is not established by the contract or by a course of dealing, s. 8 of the Sale of Goods Act 1979 states that the buyer must pay a ……… price.

Your response

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. The different judgments in May & Butcher v R (1934) and Foley v Classique Coaches Ltd (1934) can be explained on the basis that the agreement in May & Butcher was executed, but the agreement in Foley was executory.

True correct incorrect

False correct incorrect

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. A key reason for enforcing the agreement in Parker v Clarke was that the young couple relied upon the promise to their ………, by partly performing the agreement by moving out of their home and into the elderly couples' home.

Your response

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. Import and Export Ltd agrees to buy a container of mobile phones from Fones4Biz Ltd. Import and Export Ltd is not sure whether it will be able to find a buyer for the phones and Fones4Biz Ltd is not sure if it will be able to supply the phones, and so they insert a term into the written agreement that it is binding in honour only and is not intended to create legal relations between the parties.

The agreement is legally binding as a contract because it is against public policy for the parties to agree to exclude the jurisdiction of the courts. correct incorrect

The contract is legally binding on the parties because of the presumption that parties in a commercial relationship intend to create legal relations. correct incorrect

The contract is legally binding because the only exception to the rule that parties in a commercial relationship intend to create legally binding agreements is when the agreement is framed as a comfort letter. correct incorrect

The agreement is not legally binding because the clear wording of the contract rebuts the presumption of an intention to create legal relations. correct incorrect

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. The agreement Walford v Miles not to negotiate with any other party would have been sufficiently certain if it had been limited in time.

True correct incorrect

False correct incorrect

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. Lord Tomlin thought that the contract in Hillas v Arcos was sufficiently certain because:

the parties were buying standard timber and all of the trade knew what a 'standard' meant. correct incorrect

the parties had already performed a prior obligation for the sale of '22,000 standards of fair specification', and so they must have attributed a meaning to 'fair specification' in the option to buy 100,000 standards. correct incorrect

the parties had used the phrase 'fair specification' in relation to two separate terms in the agreement, and so it could be presumed (rebuttably) that they knew what it meant. correct incorrect

the phrase 'hire purchase terms' had a clear meaning to people in the building trade. correct incorrect

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. The majority of the House of Lords in ……… thought that there was an intention to create a legal relationship when Esso offered World Cup coins to drivers who bought its petrol.

Your response

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. An executed agreement is an agreement that has been brought to a premature end.

True correct incorrect

False correct incorrect