Specific Contracts

Question 1

What is the implied authority of an agent?

Answer 1

The agent can perform all subordinate and incidental acts necessary to the carrying out of the activity expressly authorised

Question 2

What can the principal do where an agent has no authority but nevertheless negotiates a contract on behalf of their principal with a third party?

Answer 2

The principal may subsequently ratify the agent’s act. Otherwise, the principal is not bound but there is no contract between the agent and the third party either. It is the agent, not the principal that will be liable for misrepresentation

Question 3

What is an undisclosed agent?

Answer 3

Where an agent does not disclose to the third party that they are acting on behalf of someone else at all, the agent is treated as the principal that comes into contract with the third party

Question 4

Xi enters into a two year hire purchase agreement with Tools Ltd on 1 October 2019. What are the capital gains implications?

Answer 4

Xi becomes the owner of the asset for CGT purposes on 1 October 2019 (even though he only has possession of the asset at that time) and he becomes the owner of the asset on 1 October 2021, but only if he exercises the option to purchase the asset

Question 5

What is a call option?

Answer 5

A call option binds the granter to sell an underlying asset

Question 6

What is a put option?

Answer 6

A put option binds a grantor to buy an underlying asset

Question 7

What does s5(2) CTA 2009 provide that a non-resident company…?

Answer 7

is within the charge to corporation tax if it carries on trade in the UK through a UK permanent establishment

Question 8

What are the three way in which an agent can bind a principal?

Answer 8

Express authority
Implied authority
Apparent authority

Question 9

Why is the provision of machinery under a contract for hire of chattels not covered by s.67 CAA 2001?

Answer 9

Because the lessee can never become the owner of the machine under the terms of such a contract

Question 10

What does a call option do?

Answer 10

It binds the grantor to sell an underlying asset and gives the grantee the right to require the grantor to sell the asset

Question 11

What is a right of pre-emption?

Answer 11

A right of first refusal

Question 12

True or false, it is one of an agent’s duties to charge a reasonable fee?

Answer 12

False

Question 13

True or false, it is one of an agent’s duties to obey the lawful instructions of a principal?

Answer 13

True

Question 14

True or false, it is one of an agent’s duties to account to the principal?

Answer 14

True

Question 15

True or false, it is one of an agent’s duties to not delegate their authority?

Answer 15

True

Question 16

True or false, the principal must obey the lawful instructions of their agent?

Answer 16

False

Question 17

What happens in a contract of guarantee when the guarantor has paid up under the guarantee?

Answer 17

The guarantor becomes a creditor against the former principal so that they may now seek to recover the sum paid from the former debtor (with interest)