Wrong MCQ's Flashcards
The owner of a bicycle wrote a letter to her friend offering to sell her bicycle to him for £150. The friend received the letter on 18 January. On 19 January, he mailed a letter back saying that he was not interested in purchasing the bicycle because he had just bought a gym membership. However, the friend changed his mind on 20 January and posted a letter to the owner accepting her offer to sell the bicycle and enclosing a cheque for £150. The owner received the friend’s rejection letter on 21 January but put it aside without reading it. The next day, she received the friend’s acceptance letter, which she opened and read immediately.
Do the parties have a contract?
Responses
(A) Under the postal rule, acceptance by mail creates a contract at the moment of posting, with a couple of exceptions not relevant here. Rejection, on the other hand, is effective when received. So, as the postal rule applies, there is a contract, because the friend’s acceptance was posted before his rejection letter was received. (B) is incorrect because whether the friend paid for the bicycle is irrelevant.
A man wanted to buy a car from his nephew, who worked at a car dealership. The two spoke on the phone to discuss a possible sale, and after offering to buy the car the man concluded the phone call by saying, ‘If I hear no more about the car, I consider it mine for £500’. The nephew said nothing, but moved the car from the forecourt before leaving for his lunch break. In his absence, another member of the dealership’s staff sold the car to a third party.
Was there a valid contract between the man and his nephew?
No. The nephew did not communicate his acceptance of the offer.
On 1 July, a buyer orders goods from a seller by email. The seller replies by email on 2 July, agreeing to the order, stating that its standard conditions of sale apply and supplying a copy. The buyer replies on 3 July, stating that their standard conditions of purchase apply and also supplying a copy. On 4 July, the seller replies again that its standard conditions of sale apply. The seller then delivers the goods on 5 July. The buyer unloads the goods, places them in their warehouse, and uses them.
On what day was a contract formed and which party’s standard conditions apply?
No contract was formed until 5 July. A response to an offer is not an acceptance if it seeks to change the terms of the offer. The buyer’s 1 July order may have been an offer, but the seller added a term in its 2 July response (that the seller’s standard terms had to be used), so that was a counteroffer and not an acceptance. The buyer’s 3 July response did the same, insisting on the buyer’s terms. Therefore, that response was a counteroffer as well. And the seller’s 4 July response insisting on their terms was also a counteroffer as it did not accept the buyer’s terms. However, the buyer will be held to have accepted these terms and a contract was formed when the buyer accepted the goods. Therefore, the seller’s standard conditions apply. This is an example of the battle of forms in which the battle usually is won by the person who fires the last shot (that is, sends the last form). The other choices are incorrect for the reasons stated above.
Two friends enter an agreement in writing. The agreed terms are that for one friend will pay the other £50 if they stop complaining about the weather.
Would this be a valid contract?
No. The consideration in this case is not sufficient. Valid consideration must be sufficient, meaning that it must have some value even if very small. Wholly illusory consideration is not sufficient in the eyes of the law, and a promise to stop complaining would normally be considered to be illusory. (
Question
On 3 November, an investor sent an email to a dealer in precious metals: “Please quote your best price on 800 troy ounces platinum bars for immediate delivery at my bank”. At 10 a.m. the next morning (4 November) the dealer replied by email, “My best price is £475 per ounce”. The investor received the dealer’s message later on that same day.
What is the best characterisation of the communications between the investor and the dealer?
A request for an offer and an offer.
The investor’s communication was a request for an offer and the dealer’s response was an offer. For a communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms. The investor’s communication does not pass the test because it is clear on its face that he did not want to be bound by whatever price the dealer came up with, but rather wanted to find out what the dealer would offer. The dealer’s communication, on the other hand, passes the test. Whilst it said nothing more than the price, it was sent in response to a request containing specific delivery terms and a specific quantity. Under the circumstances, the dealer’s response would have created a reasonable expectation in the investor that the dealer was willing to enter into a contract under the terms of the two communications.
Question
A marketing company has its offices in an older building that is heated by a boiler. On a recent cold day, the managing director of the company noticed that the office was cooler than it should be. The managing director asked the company’s facilities manager to have a heating engineer come in to determine what can be done to make the offices warmer.
The facilities manager calls a heating engineer who inspects the existing system. The engineer determines that the old heating system should be replaced. After brief negotiations regarding the price, the heating engineer agrees to supply and install a new boiler in the company’s offices. The only terms agreed are the make and model of boiler and the price.
Which of the following will be implied by statute into the contract between the company and the heating engineer?
Under the Supply of Goods and Services Act 1982, a condition that the new boiler will be of satisfactory quality and terms requiring that the installation will be carried out with reasonable care and skill and within a reasonable time.
A concert venue is booked by a famous singer for several dates on the singer’s world tour. Prior to the first concert date, the venue is burned down as a result of an electrical fault.
Can the singer terminate the contract and sue for damages?
No. The contract has been frustrated. It is therefore automatically discharged and damages are not payable.
The contract has been frustrated as the fire has occurred without fault of either of the parties. For frustration to apply, the contract must be incapable of being performed, not just more difficult or expensive. Clearly in this scenario, as there is no venue, the concert cannot go ahead. The Law Reform (Frustrated Contracts) Act 1943 (‘LRFCA’) deals with the apportionment of loss between the parties in such situations. The LRFCA provides that where a contract has become frustrated, and the parties have been discharged from further performance: (1) all sums paid in respect of the contract before discharge are recoverable and all sums payable before discharge cease to be payable, (2) if any expenses have been incurred before discharge, the court may, if it considers it right to do so having regard to all the circumstances of the case, allow retention of sums paid to account for reasonable expenses incurred, and (3) where any party has obtained a valuable benefit before the time of discharge, such benefit may be recoverable and the party who benefited may have to pay for it
A company and a computer supplier entered into a written contract for the design and supply of a sophisticated stock management computer system. The supplier worked for over a year on the design of the system, but it became clear that it was not going to be able to create a system which meets the company’s requirements. The parties agreed to end the contract, with no further payment due from the company. There is nothing in the contract dealing with termination.
What else needs to be done to bring the contract to an end?
Nothing, because the oral agreement is sufficient to end the contract.
Nothing else needs to be done to bring the contract to an end. All that is needed is an agreement to terminate the contract. There are no formal requirements, but it would be sensible to record the detail of what has been agreed in a new written contract terminating the old one. The main problem when dealing with termination (or variation) of a contract is consideration. Here, both parties are giving up rights under the contract. The company is giving up its right to future performance, and the supplier is giving up its right to payment for that performance. So consideration is not a problem
A restaurant owner enters into a contract with a supplier of wine for his restaurant. The contract contains a term headed ‘Liquidated damages’ which provides that ‘In the event that the restaurant breaches the contract, the amount of the contract price will be payable to the supplier by way of damages’. The restaurant owner is two days late paying for the wine on one occasion.
Which of the following is not a factor the courts would use to determine whether the clause is a liquidated damages clause?
ng whether a clause is a liquidated damages clause or a penalty clause, the courts will not regard words used to describe the clause as conclusive, so (A) is the correct answer. To uphold a liquidated damages clause the courts will need to be satisfied that it represents a genuine pre-estimate of loss, and that the amount payable under the clause is not extravagant, exorbitant, or unconscionable in relation to the legitimate interest it is protecting
An antiques dealer and a customer have entered into a contract for the sale of a painting. The antiques dealer is delighted to have agreed a price of £200 for the painting which he thought was of unknown origin and has been struggling to sell. Whilst packaging up the painting to send to the customer, the antiques dealer notices a previously concealed signature, and now believes the painting to be significantly more valuable than he originally thought. The antiques dealer refuses to sell the painting to the customer.
What is the position in law?
The contract would not be void, the antiques dealer would be required to sell the painting to the customer.
(D) There is no reason in law for the antiques dealer to avoid the contract. (A) is incorrect because unilateral mistake requires one party to be mistaken as to the terms of the contract, but for the other party to be aware of the mistake. In the scenario, there is nothing to suggest that the customer was aware that the painting was more valuable as the signature only came to light when the dealer was packaging the painting up for delivery. (B) is incorrect as mutual mistake occurs where the parties are at cross-purposes and both the dealer and the customer in this scenario appear to have shared a belief at the time the contract was formed that the painting was not very valuable. (C) is incorrect because, whilst it could be said that the parties have made a common (the same) mistake, the mistake concerns the quality of the subject matter of the contract, and in such cases, the courts have been reluctant to find a contract void. Common mistake usually renders a contract void if it relates to the existence of the subject matter, for example, if the goods that are the subject of the contract have perished. (E) is incorrect. A mistake does not require a contracting party to change their contractual position.QUESTION ID: CTR035
A law firm places an advertisement in a legal publication stating as follows: “Solicitor required to run a busy personal injury department. Experience required. No applicants over 50 years old should apply”.
Is this advertisement acceptable under the SRA Standards and Regulations?
No, as it tends to show that the firm is not encouraging equality, diversity, and inclusion.
A law firm specialising in discrimination claims sends out a 30-page client care letter to all clients. The client care letter provides extensive information about the firm, its services, and regulatory protections. The firm is located in an area with a large immigrant population and often the clients have poor or no English language skills.
How should client care information be given to these clients?
The firm should offer to translate the letter into different languages.
A law firm must inform clients about service standards and other matters. Traditionally this is achieved by providing clients with information in a letter and in terms of business. There is a regulatory duty to ensure that clients receive information in a way that they understand so that they are in a position to make informed decisions about the services they need, how their matter will be handled, and the options available to them. This means that if a client does not understand the information, it should be translated. (
A firm has dealt with a complaint of sexual harassment made by a junior member of staff against one of the partners. The complainant was offered a financial settlement and signed a non-disclosure agreement to confirm that she would not discuss the matter outside the firm and that she would not make a report to the SRA or the police. Neither the firm nor the complainant pursue the matter further.
Were the firm’s actions in accordance with the SRA Standards and Regulations?
No, because the firm has a regulatory duty to report serious misconduct to the SRA.
Sexual harassment indicates that the SRA Principle to act in a way that encourages equality, diversity, and inclusion has not been satisfied, and a firm must notify the SRA of such conduct on the ground that it is a serious breach of regulatory and professional duties. Any action which means that the SRA is not notified (such as the signing of a non-disclosure agreement) aggravates the regulatory consequences. Additionally, a firm must not attempt to prevent anyone from providing information to the SRA or any other body exercising regulatory, supervisory, investigatory, or prosecutory functions in the public interest. The provision of the agreement that bars the complainant from making a report is a breach for this reason as well.
Question
A solicitor’s firm is part of a local network of law firms, and the solicitor is involved in an initiative to encourage business and to build good relations between the firms. A colleague from another firm has suggested an arrangement where, if a firm does not offer services in a particular area of law, they can refer a matter in that area of law to another local law firm. Although no payments or other consideration will be given for the referrals, it will generally help each firm and will create a culture of goodwill and collaboration.
Which of the following statements best describes whether the solicitor should set up this arrangement?
The solicitor can set up the arrangement, but participants should ensure that each referral or introduction is in the client’s best interests.
The Prime Minister wishes to appoint a member of the House of Lords to his Cabinet as Secretary of State for Business. The minister is not a member of the Privy Council.
Does this pose a problem for the Prime Minister?
No, because ministers can come from the House of Commons or the House of Lords.
