13 Performing the contract 4

1 The effect of signing a document is:

(i) The person signing is prima facie assumed to have read the document.
(ii) The person signing the document is bound by all its terms, irrespective of what they provide.
Which is/are correct?
A (i) only
B (ii) only
C Both (i) and (ii)
D Neither (i) nor (ii)

2 Henry agreed to sell his horse to Richard at a given price. When the negotiations were over and the contract
formed, Henry told Richard that the horse was sound and 'free from vice'. The horse turned out to be vicious
and Richard wants to bring an action against Henry.
Richard will fail in his action because Henry's promise that the horse was not vicious was:
A A statement of opinion not fact
B Made after the original contract and was not supported by consideration
C Not relied upon by Richard
D Merely a 'sales puff'

3 John owes Catherine £26.89. Kathleen, John's mum, agrees to pay Catherine £20 on John's behalf and
Catherine accepts it 'in full settlement'. Two weeks later, Catherine requested the remaining £6.89 from
John. Is she entitled to the money?
A Yes, because part payment does not provide sufficient consideration for a promise to discharge a debt.
B Yes, because a third party cannot absolve others of their liability under a contract.
C No, because part payment by a third party is good consideration for a promise to discharge a debt.
D No, because intervention by a relative was not intended to be a legal act.

4 A Ltd has broken one of the terms of its contract with B Ltd. If that term is a warranty, which of the following
is correct?
A B Ltd may repudiate the contract and claim damages.
B B Ltd may repudiate the contract and apply for rescission.
C B Ltd is entitled to damages only.
D B Ltd is entitled to damages and rescission.

5 Which of the following statements is correct?

A A breach of condition entitles an innocent party to repudiate a contract unless he has accepted the breach.
B A breach of a condition entitles an innocent party to repudiate a contract whether or not the breach
has been accepted.
C A breach of a condition entitles an innocent party to recover damages only.
D A breach of a condition or warranty entitles the innocent party to damages only.

Questions 29
 6 In a contract for the sale of goods between a business and a consumer, any attempt to exclude the terms
implied by the Sale of Goods Act 1979 is:
A Void
B Void unless reasonable
C Voidable at the option of the consumer
D Valid if the consumer is given written notice of the clause

7 Grace owes Rebecca £40, which must be paid by 1 January. Rebecca really needs some money to do some
Christmas shopping so she tells Grace that if she pays her at the beginning of December, she only has to
pay £25, 'in full satisfaction of the debt'. Rebecca doesn't get as much Christmas money as she was hoping
for and starts to wish, on 26 December, that she had asked Grace for the full amount.
Can Rebecca claim the remaining £15 from Grace?
A Yes. However, she will have to wait until 1 January as that is when Grace will be breaching the contract.
B Yes. She can claim it from Grace and Grace must pay her by 1 January.
C No. Rebecca is bound in honour not to claim her legal rights.
D No. Grace provided consideration for part payment by paying early, therefore Rebecca has no rights
under the old contract.

8 Which of the following statements relating to contract terms is incorrect?

A Contract terms are usually classified as either conditions or warranties, but some terms may be
unclassifiable in this way.
B A breach of warranty gives the injured party the right to rescission and to claim damages.
C A breach of condition gives the injured party the right to terminate the contract and claim damages.
D Some contract terms may be implied by custom, statute or the courts.

9 Jack and Jill visited Bognor Regis and booked into a hotel for the night. On arriving in their room they
noticed that there were many conditions of contract pinned to the back of the door, including clauses
limiting liability by the hotel for loss of valuables which were not placed in the hotel safe. Jack and Jill had
never seen these conditions before. Which of the following is correct?
A The hotel has adequately disclosed the exclusion clause and Jack and Jill are bound by the conditions.
B Jack and Jill have signed for their room at reception, so the conditions are binding on them.
C The hotel has given them a misleading explanation of the terms, so Jack and Jill are not bound by the
terms, even though they have signed for them.
D Jack and Jill are not bound by the terms, because the contract was made before they reached the
room, so the hotel cannot rely on the exclusion clause.

30 Questions
10 Which of the following is incorrect?
A An exclusion clause must be incorporated into a contract before the contract has finally been concluded.
B An exclusion clause may be invalidated by the Unfair Contract Terms Act 1977, in a case to which the
Act applies.
C If a person signs a document containing an exclusion clause he is held to have agreed to it, even if he
has not read the document, unless he has been misled about the term's legal effect.
D Under the contra proferentem rule, when deciding what an exclusion clause means, the courts
interpret any ambiguity in the favour of the person who relies on the exclusion.

14 Contractual breakdown 1
1 Which of the following statements regarding anticipatory breach is incorrect?
A Anticipatory breach automatically discharges the contract.
B A person's genuine mistake will not necessarily repudiate a contract.
C Action for breach can be delayed until actual breach occurs.
D Subsequent events can affect the injured party's right to action.

2 The general rule for a contract to be discharged by performance is that performance must be exact and
precise. Which of the following is not an exception to that rule?
A Where time is not of the essence
B Where the promisee prevents performance
C Where the contract is substantially performed
D Where the contract is partially performed

3 Where there has been anticipatory breach of contract the injured party is entitled to sue:
A After a reasonable time.
B Only from the moment the other party actually breaches a contractual condition.
C From the moment the other party indicates that he does not intend to be bound.
D From the moment the injured party has fulfilled his obligations but the other party indicates that he
does not intend to be bound.

4 In an action for breach of contract, the court will not award:

A Damages for financial loss
B Unliquidated damages
C Liquidated damages
D Damages identified in a penalty clause

5 Which of the following is a genuine cause of a contract being frustrated?

A Personal disinclination to perform a contract of personal service.
B Non-occurrence of an event which is part of the purpose of the contract.
C Personal incapacity to perform a contract of personal service.
D Increase in the cost of meeting contractual terms.

Questions 31
 6 Rosie and Jim were married and owned their marital home jointly. Jim left the home, to go and live with his
secretary. The spouses met to discuss their situation and Jim agreed to pay Rosie £750 a month. She agreed
to pay the mortgage payments and Jim agreed to transfer the house to Rosie's sole possession when the
mortgage was paid off. Rosie requested Jim to put the agreement into writing and to sign it, which he did.
Rosie paid off the mortgage and Jim refused to transfer the house into her name.
What is the position?
A Rosie has not provided consideration for the agreement as all the money used to pay off the
mortgage has come from Jim both before and after he left the marital home.
B Rosie and Jim are married so the courts will assume that there was no intention to create legal
relations.
C Rosie and Jim are separated so the courts will presume that legal relations were intended and Jim
will have to transfer the property.
D The courts will assume legal relations but the consideration is inadequate due to all the mortgage
payments that Jim made prior to leaving the marital home.

7 Which of the following statements is correct?

A Damages are an equitable remedy and are primarily intended to restore the party who has suffered
loss to the same position he would have been in if the contract had been performed.
B Damages are a common law remedy and are primarily intended to restore the party who has suffered
loss to the same position as he would have been in if the contract had been performed.
C Damages are an equitable remedy whereby the court orders a person to perform a contract so that
the other party to the contract does not suffer loss.
D Damages are a common law remedy whereby the court orders a person to perform a contract so that
the other party to the contract does not suffer loss.

8 Daniel owns a mill. The main crank shaft of the mill has broken and it has to be sent to London to be used by
specialist manufacturers as a pattern for a new one. Daniel contracts with Lionel to transport the broken
shaft to London.
Lionel neglects to take the shaft to London on his next delivery, and the shaft does not get repaired and
returned to Daniel for two weeks, when it was supposed to have taken one week. During that time, the mill
has been out of operation as it cannot run without its main crank shaft. Daniel claims loss of profits against
Lionel.
Which of the following is correct?
A The claim must fail. Daniel's loss could not reasonably be foreseen by Lionel.
B The claim will succeed for the second week. Lionel was contracted to deliver within a certain time and
might reasonably have known that delay would inconvenience Daniel.
C The claim must fail. Damages are not awarded for loss of profits, but only for expenses arising from
the breach. Daniel has incurred no extra expenses.
D The claim will succeed in part. Only nominal damages will be awarded as the claim is speculative and
it is impossible to ascertain the loss.

32 Questions
9 Cee Ltd ordered goods from Dee Ltd to be delivered to F Ltd.
If the goods are not delivered,
A F Ltd can sue Dee Ltd for breach of contract.
B Cee Ltd can sue Dee Ltd for breach of contract and recover compensation for its own loss.
C Cee Ltd may sue Dee Ltd for breach of contract and recover compensation for its own loss and the
loss to F Ltd.
D Cee Ltd can sue Dee Ltd for breach of contract only if it was acting as the agent of F Ltd.

10 Which of the following statements is/are correct?

(i) The limitation period for claims for breach of contract may be extended if a debt or other certain
monetary amount is acknowledged or paid in part before the original period of limitation has expired.
(ii) The claim must be acknowledged as existing by the defendant. This does not have to be in writing.
A (i)
B (ii)
C Both (i) and (ii)
D Neither (i) nor (ii)

15 Contractual breakdown 2
1 Which of the following statements concerning limitation to actions for breach is incorrect?
A The right to sue for breach of contract is usually statute barred after six years from the date on which
the cause of action accrued.
B The right to sue for breach of contract by deed is statute barred after twelve years from the date on
which the cause of action accrued.
C If the defendant is of unsound mind at the time of the contract, the six year period begins to run
when his disability ceases or he dies.
D If the information relevant to possible claims is deliberately concealed, the normal period of six years
can be extended after the period of six years has started to run.

2 Which of the following is not an equitable right in contractual breakdown?

A Rescission
B Specific performance
C Quantum Meruit
D Injunction

Questions 33