Chapter 3 - Law of Contract

Question 1

What are contract terms implied in fact

Answer 1

When not expressly stated in contract requirements, but when brought to court it is successful

In other words - the truth about events as opposed to interpretation

Question 2

In contract law, acceptance of an offer

Answer 2

• May be implied by conduct

- Must exactly match the terms of an offer

Question 3

Contract under seal

Answer 3

Formal contract which is in writing and is witnessed, sealed and delivered

Question 4

Unilateral contract (offer)

Answer 4

Only one person is legally bound in a contract, e.g. if there is an offer accepted they are bound

Question 5

Bilateral contract

Answer 5

Each party makes a promise to the other and they are legally bound

Question 6

Promissory estoppel

Answer 6

Although a promise made without consideration cannot be enforced and will not complete a contract, it may be used as a defense to legal action

Question 7

Contracts which must be under seal (contracts made by deed)

Answer 7

Contracts which must be signed and witnessed

Question 8

Ratify

Answer 8

Sign or give formal consent

Question 9

Repudiate

Answer 9

Refuse to accept

Question 10

3 ways of implied terms

Answer 10

In fact = not stated but presumed

By custom or usage = the way the market works

In law = does not need to be explicitly stated

Question 11

Warranty vs condition

Answer 11

Warranty affects minor term - suspension

Condition affects a major term - terminiation

Question 12

Defective (therefore destroyed) contracts may arise from

Answer 12

• Illegality
• Improper pressure
• Mistake
• Misrepresentation
• Non disclosure

Question 13

Why may a contract be discharged

Answer 13

• Performance
• Breach
• Frustration, e.g. death/destruction of property
• Agreement
• Operation of law

Question 14

Remedies in contract

Answer 14

• Termination
• Damages
• Special performance or injunctions
• Other remedies inc limitation of action

Question 15

Assignment

Answer 15

An original party to the contract may be able to assign (transfer) their rights under the contract to another who stands in their place

Question 16

Equitable Assignment

Answer 16

Fair and valid. Must be informed and assignor must intrust the debter to discharge the obligation by payment to, or performance for, the assignee

Question 17

Rights which cannot be assigned

Answer 17

Most ‘personal’ contracts

Question 18

One of the requirements for the rule in Rylands v Fletcher to operate, is that there must be

Answer 18

A non natural use of land by the defendant

Question 19

In contract law, acceptance of an offer

Answer 19

may be implied by conduct

must exactly match the terms of the offer

Question 20

Under the Limitations Act 1980, the limitation period for persona injury claims are

Answer 20

3 years from the date of injury

Question 21

For a statutory assignment to take place under the Policies of Assurance Act 1867, what must occur for there to be a legal assignment?

Answer 21

A written notice of assignment must be given to the insurer at its principal place of business

Question 22

A gardener who was entitled to £2,000 under a contract with a private client assigned her rights under the contract to one of her plant suppliers. To be legally valid as a statutory assignment, this assignment must be

Answer 22

absolute (not diminished in any way)

Question 23

After what period of time does an action for breach of a simple contract become statute-barred if the action is NOT in respect of personal injuries?

Answer 23

6 years

Question 24

A gratuitous promise is contractually valid and binding on the promissor when it is

Answer 24

in the form of a deed

Question 25

Adam had a contract with a specialist storage company to store some valuable paintings, but damp storage conditions resulted in damage to the paintings. Although Adam’s contract did NOT expressly state the storage requirements had to be suitable, he successfully sued the storage company on the basis that the contract terms were implied

Answer 25

in fact

Question 26

An employers’ liability insurance policy can be classified as being a type of

Answer 26

o bilateral contract

o simple contract

Question 27

Cancelling a debt by mutual agreement and creating a new debt in its place is known as

Answer 27

Novation

Question 28

When an employee is contracted out from joining a rival it is known as a

Answer 28

restraint of trade

Question 29

Contracts under seal vs simple contract

Answer 29

All contracts must be either of these 2

Contract under seal - is a formal contract which is in writing and has to be witnessed, sealed and delivered

Simple contract (Informal contract) = All other contracts