Contract

Question 1

What are the builder’s rights as against the merchant?PTA1 30

Answer 1

Where a time for delivery is agreed in a commercial contract, there is a presumption that time for delivery is of the essence of the contract. This means that the agreed delivery time is a condition of the contract. If it is not complied with, the innocent party (here, the builder) can terminate the contract and claim damages. The damages will include the additional cost of sourcing replacement bricks. However, the compensation payable by the builder to their customer depends on the contract between the builder and the customer, so it is unlikely to be ‘loss flowing naturally from the breach’. The builder could claim it only if it was in the reasonable contemplation of the builder and the merchant when they concluded their contract. Here, there is no indication in the facts that the merchant was aware that compensation was payable to the builder’s customer in the event of delay, and so the builder cannot recover for what they must pay to their customer.

Question 2

What is the likely effect of the car dealer’s breach of contract?

PTA1-32

Answer 2

Breach of the requirement to have a car valeted before delivery does not go to the root of the contract, and is therefore not a fundamental breach which would give the innocent party the right to bring the contract to an end. It is therefore a breach of a warranty (a lesser term) rather than a condition. Breach of a warranty entitles the customer to damages only

Question 3

Which of the following best describes the relationship between legislation and judges’ decisions in the common law system of England and Wales?-PTA1-38

Answer 3

Generally, under the common law system of England and Wells, statutes take precedence over court decisions. However, not every conceivable case can be covered by a statute, so decisions made by judges fill in the gaps and details that legislation has left.
judges are allowed to interpret and apply legislation when the legislation may not be entirely clear when applying it to the facts of a particular case

Question 4

PTA1-43: Which of the following statements best describes the limitation period in relation to the management company’s claim against the developer?

Answer 4

The management company can avail itself of the provisions of the Latent Damage Act 1986, which provides that a claim can be brought within six years of the date of accrual or three years from the earliest date on which the claimant knew, or reasonably ought to have known, material facts necessary to bring an action alleging negligence (the starting date). Here, the negligence will be deemed to have accrued at the completion of the project (1 August 2010). Six years from the date is 1 August 2016 (choice (A)). But instead, the management company can rely on the three-year period. The management company learned of the negligence on 26 February 2021. Three years from that date is 26 February 2024

Question 5

What else needs to take place for the treaty to become part of UK law?PTA1-46

Answer 5

To become part of UK law, Parliament needs to pass an Act of Parliament incorporating the treaty into UK law. Under the doctrine of parliamentary sovereignty, no form of law is higher than an Act of Parliament. This means that in order for an international treaty to become part of UK law, it needs to be incorporated through an Act of Parliament. There is no need for the Supreme Court, the Monarch, or the Scottish Parliament to approve the treaty for it to become part of UK law

Question 6

Is the importer liable for breach of contract?PTA1-47

Answer 6

The importer will not be liable for breach because the offer had lapsed and so no contract was formed. Unless a time for acceptance is specified, an offer will lapse after a reasonable time. What is ‘reasonable’ will depend on the nature of the subject matter, for example, an offer to purchase perishable goods, will lapse more quickly. Here, the offer was for a consignment of fresh fruit. It is not reasonable to expect an offer for the sale of consignment of fresh fruit to remain open for three weeks–because the fruit would rot by then, as indicated by the fact that the importer feared its rotting after just three days. Therefore, the offer had lapsed before the greengrocer accepted it, so the importer is not liable for breach of contract.

Question 7

Which of the following correctly states the amount which the client will have to pay to their solicitor under the damages based agreement?PTA1-49

Answer 7

Damages based agreements are ‘contingency’ agreements in that they are contingent on the success of the claim and recovery of damages. If nothing is recovered, the solicitor is not entitled to legal costs. If the claim is successful, the solicitor’s standard time costs can be recovered from the losing defendant. Here, the client has been awarded £400,000 in damages and the applicable percentage in the agreement is 10%, which means the solicitor is entitled to £40,000 from the client in total. Note that any amount the defendant has been ordered to pay in costs would be deducted from what the client owes when working out the total amount the client has to pay to the solicitor.

Question 8

Is the court likely to find that the variation to lower the commission is binding?A1-51

Answer 8

A court is likely to find the variation binding because the airline had a right to terminate the contract and, therefore, there was consideration to support the variation (specifically, the airline gave up whatever right it had to terminate the contract based on the agency’s poor record keeping). Therefore, (E) is incorrect. (A) is incorrect because a lawful act (such as terminating the contract) can amount to economic duress only in very exceptional cases such as blackmail. (B) is incorrect because the airline’s expenditure was not incurred in return for the agreement to vary the commission; it was incurred to resolve the problem with the agency’s record-keeping, so it is past consideration

Question 9

Which of the following best describes the scope of the royal prerogative powers?A2-52

Answer 9

he royal prerogative is a collection of powers recognised by the common law as belonging to the Crown, which include the Monarch, government ministers, and government departments. This is in contrast to statutory powers, which are granted by Parliament to the government.

Question 10

Which of the following best states the legal position regarding the shareholders’ rights with respect to the dividend?a1-53

Answer 10

The shareholders may reduce the amount of the dividend, through an ordinary resolution adopted for that purpose. The directors have the power to declare dividends out of lawfully available funds, but before the dividend may be paid, the shareholders must approve it (or approve a lesser amount) through passing an ordinary resolution.the shareholders have no power to increase a dividend, even if there are additional funds lawfully available for that purpose

Question 11

On what basis could the plumber make a claim against the manufacturer?

-A1-59

Answer 11

Under the Sale of Goods Act 1979, when a seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract must be reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied. (There is also an implied term that the goods must be of satisfactory quality, that is, fit for the purpose for which such goods are generally used, but that is less likely to help the plumber in this case.whilst the plumber’s requirement might have been eventually incorporated into the contract as an express term, this is not clear in the scenario and is much less likely, particularly if they were dealing on standard terms and conditions

Question 12

Which of the following best explains the position of the Secretary of State?A1-61

Answer 12

Because there is a serious conflict of interests between the Secretary of State’s private interests and their ministerial duties, the Secretary of State will likely need to resign from government. Ministers are required to avoid such conflicts of interest. Consequently, the Secretary of State would likely be expected to resign. ministerial resignations usually relate only to their position within the government; their seat in the House of Commons (or the House of Lords) is unaffected.

Question 13

To which track will the court likely allocate the case?

Answer 13

C) The case will be allocated to the multi-track. Claims in the County Court for more than £25,000 are allocated to the multi-track. (A) is incorrect because the small claims track is for cases involving less than £10,000 (or personal injury claims for less than £1,500). (B) is incorrect because the fast track is used for cases of more than £10,000 (or more than £1,500 for personal injury claims) and up to £25,000. (D) is incorrect, as the County Court Money Claims Centre handles debt claims and does not handle cases for damages such as the claim here. (E) is incorrect for a few reasons. First, the High Court usually does not hear cases involving less than £100,000 or where the claimant does not expect to recover at least £50,000 for a personal injury. Neither of those thresholds are met here - the claimant has chosen not to pursue damages for pain and suffering (and even if the patient pursued the claim, it was for less than £50,000). It should be noted that even if a malpractice claim for £50,000 were the threshold, the amount would not be met here because when determining the value of a claim, interest and costs are excluded. The claim here without interest and costs was £47,500.

Question 14

Which of the following best describes whether the solicitor has committed an offence under the Proceeds of Crime Act 2002?

Answer 14

The solicitor has not committed the offence of tipping off because she can rely on the defence of disclosure between institutions. The indirect offence of tipping off can arise where there is a disclosure to a third person that a suspicious activity report has been made to the police, HM Revenue and Customs, the National Crime Agency, or the firm’s nominated officer if that disclosure might prejudice any investigation that might be carried out. However, a legal professional will not commit a tipping off offence if (1) the disclosure is made to another legal professional in the UK, a European Economic Area state, or a country or territory that imposes money laundering requirements equivalent to the European Union; (2) the disclosure relates to a client or former client of both parties, or a transaction involving them both; (3) the disclosure is made for the purpose of preventing a money laundering offence; and (4) both parties have equivalent professional duties of confidentiality and protection around personal data. Here, the solicitor disclosed her colleague’s suspicious activity report to the other solicitor, which could constitute tipping off. However, the solicitor may rely on the defence of disclosure between institutions. The disclosure was made to another lawyer in the UK, the disclosure related to a transaction involving them both, the disclosure was made to prevent the other solicitor committing his own money laundering offence (that is, failure to report), and both parties are in the UK and have equivalent professional duties of confidentiality

Question 15

What remedies are available to the buyers for misrepresentation?A1-70

Answer 15

This is a case of negligent or innocent misrepresentation. In this situation, the innocent party can always rescind the contract, unless one of the bars to rescission applies or the court orders damages in lieu of rescission (which is unlikely here because of its significance to the buyers). The innocent party can claim damages unless the other party can prove that they had reasonable grounds for believing, and did believe, that the statement was true. That might be the case here if the sellers had no way of knowing of the planning application when they made the statement to the buyers. In that case the misrepresentation would be innocent rather than negligent. (A) is not correct, because it is not necessary to prove that the sellers knew of the planning application in order to claim damages. That would be tantamount to fraudulent misrepresentation, but that is not the only situation in which damages are available. (B) is not correct because rescission is available for both innocent and negligent misrepresentation. (D) is not correct because the innocent party does not have to prove negligence: it is for the other party to disprove it. (E) is incorrect because both rescission and damages may be available even though the representation was not fraudulent. QUESTION ID: CTR128

Question 16

What is the painter’s taxable income?A1-71
A painter has taxable trade profits for the relevant tax year of £85,000. The painter also owns an investment property which he rents out and which is generating a rental profit of £26,000. The personal allowance for the relevant tax year is £12,500.

Answer 16

) £104,000. Both the painter’s trade profits and rental profits are assessable. Therefore, in total his income was £111,000. He may deduct his personal allowance from this figure. However, as his income is above £100,000, the personal allowance must be tapered so that he loses £1 of allowance for every £2 of income above £100,000. He has £11,000 of income over £100,000, so £5,500 must be deducted from his £12,500 allowance, leaving him with £7,000. Therefore, the painter’s taxable income is £85,000 + £26,000 - £7,000 = £104,000.QUESTION ID: TAX004

Question 17

Which of the following statements best describes whether the solicitor should act?

Answer 17

The solicitor’s own personal interest and relationship with the husband create an own interest conflict in this matter (or a significant risk of one) and so this solicitor should decline to act. Of concern is that the solicitor could be tempted to act in her husband’s favour in the negotiations. The solicitor also has a financial interest in the matter because she is married to the husband. (A) is incorrect because the solicitor must decline to act due to the own interest conflict. (C) is incorrect because the ‘substantially common interest’ exception is only relevant to conflicts between clients, and here the main concern is the solicitor’s own interest conflict. (D) and (E) are incorrect because the solicitor cannot act even with consent.QUESTION ID: ETH045
QUESTION ID: ETH045

Question 18

A1-75:Which of the following statements most accurately describe the approach that the court will take in determining the weight that they should apply to the hearsay evidence?A party serves notice that they propose to rely upon hearsay evidence at trial. At the hearing in accordance with the notice, they adduce evidence from a witness whose signed statement they have served, but who is not present in court and cannot therefore be cross-examined or confirm that the contents of their statement are true to the best of their knowledge and belief.

Answer 18

These are three of the points that the court will consider when determining the weight to apply. They will also consider whether the case involves ‘multiple hearsay’, whether the original statement was edited and whether there can be any suggestion that the events leading to the evidence being presented as hearsay evidence constitute an attempt to prevent proper evaluation as to its weight. (A) is incorrect because this is not a consideration for the court in determining the weight to attach. (B) is incorrect because the court will take no steps to adjourn the hearing of its own accord. (C) is incorrect because this is not a consideration for the court in determining the weight to attach. (E) is incorrect because this is not a consideration for the court in determining the weight to attach.QUESTION ID:

Question 19

A1-76: Which of the following best states the procedure for registering the transfer of shares?

Answer 19

The Model Articles give the board absolute discretion to refuse to register a transfer of shares. The board would be limited only by their duty to act in the best interest of the company. Therefore, (E) is incorrect. (A) is incorrect as no fee can be charged for registering a transfer of shares under the Model Articles. (C) is wrong as there is no special rule for transfers to existing shareholders. (D) is incorrect because a bona fide business reason for a refusal to register is not needed. As indicated above, the only limitation on the board’s discretion is their duty to act in the best interest of the company. So, a personal reason for not registering the transfer (such as they don’t want to give the transferee shareholder more voting power because they think he votes recklessly) could be valid. QUESTION ID: BSL19

Question 20

Which of the following activities would the solicitor be able to conduct in her business if no FSMA exclusion or exemption applies?

Answer 20

Under the general prohibition of FSMA, a solicitor may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. The specified activities and investments might be remembered with the mnemonic device ‘ADAMS F.M.DIPS’. Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding. The specified investments most relevant to a solicitor = Funeral plans, Mortgage contracts, Debentures, Insurance contracts, Pension schemes, and Shares in a company. The solicitor would be able to arrange for the sale of land for a client because while arranging is a specified activity, land is not a specified investment. (A) is incorrect because advising is a specified activity and a mortgage is a specified investment. (B) and (E) are incorrect because both clearly involve regulated activities (managing and safeguarding, respectively) and specified investments (debentures and pension schemes, respectively). (C) is incorrect because contracting on behalf of a client means the solicitor would be dealing as an agent, which is a regulated activity, and an insurance policy is a specified investment

Question 21

A1-79: Will the nail polish supplier be successful in enforcing the contract against the nail salon?

Answer 21

Every partner is an agent of the partnership and has apparent authority to bind the partnership on contracts as apparently carrying out business of the kind usually carried on by the partnership unless the creditor knows the party has no authority. Here, the partner told the supplier they did not usually order stock and so the supplier is on notice that this partner has no authority. Therefore, (B) is incorrect. (A) is incorrect as implied authority is a type of actual authority that arises from a previous course of dealings among the partners - a partner who lacks actual authority, but who nevertheless has been allowed by the firm to exercise the authority that is lacking, will be held to have such [implied] actual authority. Here, nothing in the facts indicates that the partners have condoned this partner’s purchase of varnishes before and so there is nothing on which to base a claim of implied authority. (C) is incorrect as the scenario tells us that this partner does not order stock and so has no actual authority. (D) is incorrect because it is irrelevant - written proof is not required for apparent authority. QUESTION ID: BSL160

Question 22

A1-80:In which of the following situations will the proposed acquisition be defeated?

Answer 22

(C) The proposed acquisition will be defeated if all four directors attend and the chairman and one director vote against the acquisition. A board resolution is passed by simple majority vote, provided a quorum is present at the meeting. Under the Model Articles, a quorum is two directors. When there is a tie vote, the chairman has the casting vote-that is, the vote goes the way the chairman voted. If all four directors attended the meeting and two directors voted in favour of the acquisition and two voted against, there would be a tie. But in this scenario, the chairman voted against the acquisition, so it would be defeated. (A) is incorrect (that is, the proposed acquisition would not be defeated) because a majority (3:1) of the directors voted in favour of the acquisition-the chairman’s casting vote only matters in the case of a tie. (B) is incorrect because the meeting had a quorum, and all the directors present approved the acquisition. (D) is incorrect because again, two directors constitute a quorum and the chairman’s casting vote will come into play: there was a 1:1 tie and the chairman voted to approve the acquisition.

Question 23

The defendant in a commercial breach of contract claim is ordered to pay the claimant’s costs on the indemnity basis. One item of costs is related to the claimant attending two conferences with counsel to advise on liability and quantum in the claim. The defendant wishes to object on the basis that the solicitor should have been capable of giving this advice himself and, if not, only one conference with counsel was required.
Which of the following best describes the test the judge will apply to determine whether the defendant should pay the costs of the conferences?

Answer 23

(C) Choice (C) contains all of the criteria the court will consider when assessing costs on the indemnity basis: reasonably incurred, reasonable in amount, and doubts resolved in favour of the party receiving the costs (which under our facts is the claimant). (A) is incorrect because it is not enough that the cost was reasonably incurred; it must also be reasonable in amount. Additionally, doubts are resolved in favour of the receiving party under the indemnity basis; doubts are resolved in favour of the paying party (here the defendant) under the standard basis. (B) is incorrect for similar reasons (only one of the two criteria and doubt resolution incorrect). (D) is incorrect as proportionality is relevant on the standard, not the indemnity, basis. (E) is incorrect as it is too vague to be the basis for allowing or disallowing individual items, although the principle of the interests of justice generally underpins the assessment of costs.QUESTION ID: DIS

Question 24

Counsel wishes to convince the panel of judges in the Court of Appeal to depart from precedent by referring to persuasive material from previous case law.

Which of the following is not an example of persuasive precedent?

Answer 24

A majority judgement from a previous case on similar materials facts: because this is the ratio decidendi and is binding. The remaining answers are persuasive because they have been mentioned in previous case law as an aside to the ratio and are not binding. Sometimes judges will provide hypothetical examples where the facts differ slightly from those before them in order to explain how they have reached their decision. They may also consider academic articles and the decisions of foreign courts that have explored similar areas of law for inspiration in helping them to reach a decision. QUESTION ID: ELS014

Question 25

A photography buff wrote a letter to his friend offering to sell him his camera, which the friend had admired, for £1,500. The day after the friend received the letter, he posted a letter back in response to the photography buff agreeing to purchase the camera for £1,500. After posting the letter, the friend was describing the camera to a colleague who was very knowledgeable about photographic equipment, and learned that the camera was worth no more than £1,200. The friend immediately telephoned the photography buff and told him that he had no interest in buying the camera. The photography buff received the friend’s letter agreeing to purchase the camera a day after receiving the phone call. The photography buff insists his friend is bound by the contract.

If the photography buff brings a court action against his friend for breach of contract, and the friend defends on the grounds that no contract was formed, how should the court rule?

Answer 25

(C) A contract was formed because the friend’s acceptance was effective on dispatch. Under the postal rule, acceptance by post creates a contract at the moment of posting, properly addressed and stamped, unless the offer stipulates that acceptance is not effective until received. Here, the friend dispatched first an acceptance and then a rejection of the photography buff’s offer. The postal rule applies because the photography buff’s offer did not specify that acceptance was not effective until receipt. Because the friend dispatched his acceptance before he called with his rejection, the postal rule applies. Thus, the friend’s acceptance was effective, thereby creating a contract at the moment it was mailed, and his attempted rejection was ineffective. (A) is incorrect because the letter from the photography buff indicates that the subject matter of the contract was his camera that the friend had admired for some time. This description appears on its face to be sufficiently definite that a court would be able to determine with reasonable accuracy which camera is subject to the photography buff’s offer to sell. (B) is incorrect because once the acceptance was effective, the fact that the photography buff received the rejection by telephone before he received the acceptance letter has no effect on the formation of the contract. (D) is incorrect because there is no requirement that a rejection of an offer to enter into such a contract must be in writing. (E) is incorrect as there is no suggestion that the initial letter was merely an invitation to treat. An invitation to treat is an expression of willingness to negotiate, whereas the letter from the photography buff was definite and clear enough to be an offer, and also does not fall into one of the categories of usual invitations to treat, for example, adverts, displays in shop windows or on shop shelves, and tender

Question 26

A claimant brings a negligence action against a sole trader for injuries the claimant sustained within the sole trader’s store. Negotiations and alternative dispute resolution did not yield a settlement or resolution to the case. The defendant then made an application to strike out, arguing there was no case to answer. The court rejected the application, finding that the claimant had made a prima facie case for recovery. The case is now about to go to trial.

Which of the following best describes the burden of proof in this case?

Answer 26

(C) The claimant must prove their claim on the balance of probabilities; that is, that their version of the facts is at least slightly more likely than not. (A) is incorrect because at least as likely as not would be 50-50. That’s not quite enough in a civil case. As just indicated, the claimant must prove that their version of the facts is at least slightly more believable than the defendant’s. (B) is incorrect because ‘beyond a reasonable doubt’ is the standard of proof required in the criminal court. (D) and (E) are incorrect because the defendant does not bear the burden of disproving the claimant’s case. The fact that the court refused to grant an application for a motion to strike does nothing to change this. (E) is further incorrect because it states the wrong burden - ‘beyond a reasonable doubt’ is the criminal standard

Question 27

A solicitor is representing a client in a personal injury claim. One of the issues relates to the extent to which the claimant’s broken bones will heal. The court has allowed each party to hire their own expert on the matter. The solicitor for the claimant hires an orthopaedic expert to examine the claimant’s medical record and give an opinion.

Which of the following is true regarding the report the solicitor receives from the orthopaedic expert?

Answer 27

The expert’s report must be disclosed to the defendant if the claimant intends to rely on it and it will lose its privilege. When a court authorizes the parties to hire their own experts, the expert’s report does not have to be disclosed unless the party intends to rely on it. Such reports are privileged and are not subject to inspection by the party’s opponent. However, if the party does intend to rely on the report, it must be disclosed and it loses its privilege and is subject to inspection. It follows that the other answer choices are incorrec