Which ONE of the following is CORRECT?
S.13 of the Supply of Goods and Services Act 1982 is a condition
S.13 of the Supply of Goods and Services Act 1982 is an innominate term
S.13 of the Supply of Goods and Services Act 1982 is a warranty
The answer is B – s.13 of the Supply of Goods and Services Act 1982 is an innominate term.
Which ONE of the following is CORRECT?
If a condition is broken, the innocent party may be able to terminate the contract as well as sue for damages
If a warranty is broken, the innocent party may be able to terminate the contract as well as sue for damages
If a condition is broken and the innocent party terminates the contract, he cannot also sue for damages
If an innominate term is broken, the innocent party can sue for damages but cannot terminate the contract
the only correct statement is A.
B is not correct because if a warranty is broken the innocent party can sue for damages but cannot terminate the contract.
D is not correct because if an innominate term is broken the innocent party can terminate the contract if the effects of the breach are major.
Delia owns a restaurant. She enters into a contract with the celebrity chef Nigel Bites to work at her restaurant for the months of June and July. Nigel agrees not to work as a chef elsewhere during this period. On 1 May Nigel telephones Delia and says he will not be working for her as he has received a more lucrative offer to work as a chef elsewhere.
Indicate whether the following statement is TRUE or FALSE.
Delia could obtain a decree of specific performance to compel Nigel to work for her during June and July.
The statement is false. The court will not order specific performance of an employment contract.
Sportsgoods Ltd contracted to sell a consignment of tracksuits to Barnes plc for £10,000, payment to be within 10 days of delivery. Sportsgoods delivered the tracksuits a month ago. Barnes plc have not paid.
What is the most appropriate remedy for Sportsgoods Ltd?
Specific performance
Injunction
Damages
Action for the agreed sum.
the most appropriate remedy is an action for the agreed sum. Although Sportsgoods could sue for damages, it seems that their only loss is the amount that Barnes owes them and so an action for the agreed sum would be the best approach.
Tom employs Karen to paint his kitchen for £400, payment to be on completion. Karen starts work but then Tom tells her to stop as he has changed his mind.
Which ONE of the following statements is CORRECT?
Karen could sue Tom for the agreed sum of £400 because Tom wrongfully prevented her from completing the work.
Karen could obtain a decree of specific performance to force Tom to allow her to finish the work
Karen could sue for damages or for a quantum meruit
Karen’s only claim is for damages for loss of profit
the correct answer is C. A is not correct as the duty to pay has not yet arisen ( payment was to be on completion).B is not correct as the court will not grant specific performance of a contract for services.
In April, Skytours Ltd agreed to employ Sue as a courier for 3 months starting on 1 June. In May Skytours told Sue that there had been a change of plan and her services would not be required.
Which ONE of the following is CORRECT?
Skytours is in breach of contract, but Sue must wait until 1 June before taking proceedings.
Skytours is in breach and Sue can terminate the contract and sue for damages immediately if she wishes.
Skytours cannot be in breach until 1 June as they may decide they need Sue as a courier after all.
B is the correct answer. Skytours have committed an anticipatory breach. This means that Sue can terminate immediately and sue for damages - she does not have to wait until 1 June.
Andrew engaged Sparrow Ltd, a firm of building contractors to repair a garden wall for £1,000 which he paid in advance. Sparrow Ltd was due to start work on 1 May. On 2 April Sparrow Ltd told Andrew that they would be unable to do the work. Andrew telephoned a few other contractors and found a firm who would repair the wall for £700 and start work on the 1 May.
What is the most appropriate remedy for Andrew?
Specific performance
Damages
Restitution - total failure of consideration
Restitution - quantum meruit
the most appropriate remedy would be restitution on the basis of total failure of the consideration ie Andrew would get back his £1,000.
Delia owns a restaurant. She enters into a contract with the celebrity chef Nigel Bites to work at her restaurant for the month of June. Nigel agrees not to work as a chef elsewhere during this period. On 1 May Nigel telephones Delia and says he will not be working for her as he has received a more lucrative offer to work as a chef elsewhere.
Indicate whether the following statement is TRUE or FALSE.
Delia could probably obtain an injunction to prevent Nigel working as a chef elsewhere during the month of June.
The statement is true. Injunctions have been awarded to enforce negative covenants in employment contracts and as the time limit is relatively short (1 month), and he is only prevented from working as a chef, the court would probably award an injunction in this case.
Stan agrees to build a conservatory for Jade, price £12,000, payable on completion. Stan does some of the work and then abandons the job. Jade gets another contractor to finish the work for £5,000.
Which ONE of the following is CORRECT?
Stan is entitled to some payment as he has substantially performed his obligations.
Stan is not entitled to any payment for the work done.
Stan is entitled to a reasonable sum for the work he has done as Jade has accepted his partial performance.
Stan is entitled to some payment for the work he has done, but the maximum amount he can receive is £7,000.
B is the right answer. The doctrine of complete performance applies here – Stan has not performed his side of the contract properly and so is not entitled to payment. None of the exceptions apply here. Substantial performance does not apply as Stan has not finished the work. Jade has not voluntarily accepted Stan’s partial performance. Jade has not wrongfully prevented Stan performing the contract and the obligations are not divisible.
Which ONE of the following statements is WRONG?
Breach of an innominate term will only entitle the innocent party to terminate the contract if the breach had substantially deprived them of the whole benefit thye expected to receive under the contract.
If an innocent party wrongly treats breach of an innominate term as repudiatory, the innocent party may be sued for breach of contract.
Where there is an anticipatory/repudiatory breach of an innominate term the innocent party must make an immediate decision whether to affirm the contract or to accept the breach as a present breach and terminate the contract.
Following a breach of contract the innocent party must take reasonable steps to mitigate their loss: the burden of proof is on the defendant to show failure to mitigate.
In Gibbs v Leeds United Football Club, did Gibbs have to make a snap decision whether, or not, to resign? No, he had a reasonable time to decide and so Statement C is WRONG.
A builder made a contract with a client to refurbish the client’s offices at a total cost of £10,000 to be paid on completion. The builder abandoned the job half way through the work. None of the work has been completed to the client’s satisfaction. The client has found another builder to complete the work at a total cost of £8,000.
What damages can the client recover from the original builder?
None, as the new builder is able to complete the work at a lower cost and the client is not obliged to pay anything for the work done.
£8,000 damages, because this is the sum the new builder is charging.
£10,000 damages, because this is the sum the first builder was charging.
£2,000 damages, because the client is obliged to pay the first builder half of the cost that the new builder is charging (£4,000) as the first builder had done half the work. The total cost would therefore be £12,000 being £2,000 more than the original price.
£5,000 damages, because the client is obliged to pay the first builder half of the cost agreed under the first contract (£5,000) as the first builder had done half the work. The total cost would therefore be £13,000 being £5,000 more than the new price.
Option A is correct. Damages are to put the injured party – the client – in the position as if the contract had been properly performed. Importantly damages can only be recovered if the injured party has suffered a loss. £8,000 (the sum the client will now have to pay) is lower than £10,000 (the sum the client would have had to pay had the original contract been properly performed). There is therefore no loss.
It should be noted that the original contract price of £10,000 was to be paid on completion and has not been paid. The client is released from any obligation to pay this when the first builder abandoned the job.
Options B and C are wrong as neither of these properly set out the loss suffered. Damages in this case would be calculated by reference to any amount that the client had to pay in excess of the original £10,000 contract price.
Options D and E are wrong in that the client does not have to pay the first builder anything. The first builder has abandoned the job without completing any part of it. The client has no choice but to accept the work done. This is a repudiatory breach by the builder. The client can terminate the contract, i.e. is released from any further obligation to pay the sum due on completion.
A landlord, wanted to upgrade one of his rental properties. He entered into a contract with a bathroom fitter to remove the old bathroom fittings and to replace them with new sanitary ware. The contract price was £8,000. The landlord paid the builder £500 in advance and agreed to pay the balance on completion. The work was finished but the shower tray leaks (as it was not sealed properly) and so the shower cannot be used. The landlord is refusing to pay the balance of the contract price.
If the builder sued for breach of contract which of the following would be the most likely legal outcome?
The builder would be awarded £7,500 .
The builder would keep £500 but not be entitled to any more money.
The builder would be awarded £7,500 less the cost of properly sealing the shower tray.
The builder would have to forfeit £500 and not be entitled to any more money.
The builder would be awarded a reasonable sum in restitution for the work he had done.
C is correct. There has been substantial performance as the work had been finished but appears to be only slightly defective.
The builder is not entitled to £7,500 as the work was not precise/exact (the doctrine of complete performance) and so A is wrong.
B is wrong. The builder would be entitled to keep £500 in restitution (as there’s not been a total failure of consideration) but would be entitled to more money due to having substantially performed the contract
D is wrong. The builder can keep £500 advance payment in restitution as there was not a total failure of consideration.
E is wrong –the builder is not entitled to a reasonable sum for what he did as there was no voluntary acceptance of part performance (Sumpter v Hedges).
A company has agreed to build a large greenhouse in a woman’s garden with a south-facing entrance. The total cost was £4,000, payment on completion. After the greenhouse has been built, the woman discovered that the door is facing north and the roof is not waterproof. It will cost £3,500 to put things right. The woman refuses to pay the company.
Which of the following best describes if the company is entitled to some payment?
The company is entitled to full payment as the greenhouse has been built.
The company is not entitled to full payment but they are entitled to some payment as the greenhouse has been built by them.
The company is not entitled to some payment as the work is seriously defective.
The company is entitled to full payment minus the cost of putting things right because it has substantially performed its obligations.
The company is entitled to some payment minus the cost of putting things right because it has substantially performed its obligations.
Option C is correct. The work completed by the company is seriously defective and it will cost £3,500 to put it right compared to a contract price of £4,000. As a result, the contractor is not entitled to any money.
Options A and B therefore are wrong.
Options D and E are wrong. For substantial performance to apply the work has to be finished and only be slightly defective, which is not the case here on the facts.
A builder and a man enter into a contract for the builder to construct a garage for the man. The agreed price is £10,000 (being £1,000 to clear the site, £5,000 for building materials and £4,000 for labour) payable on completion of the work. The builder begins work by clearing the site. Before the builder commences construction of the garage they realise they have not charged enough for the work and will not be able to finish the job and make a profit. The builder asks the man for more money but the man refuses. The builder decides to abandon the job.
The builder sends an invoice to the man for £500 to cover the cost of clearing the site. The man refuses to pay the invoiced sum.
The man employs a new builder who completes the garage at an agreed price of £9,750. The builder commences legal action to claim the sum due under the invoice.
Will the man be liable to pay the £500?
Yes, because in providing their services the builder provided good consideration for the sum claimed under the invoice.
Yes, because the builder had finished the first stage of the job and is entitled to be paid for this work.
No, because the man will be entitled to damages due to the builder’s breach of contract and the man’s damages will exceed the invoiced sum.
Yes, because the man voluntarily accepted the work done to clear the site.
No, because the builder would only be entitled to payment when they complete the work.
Option E is correct. The man promised to pay £10,000 on completion of the work. In a contract where the parties agree that the work must be done before the price falls due, the doctrine of complete performance provides that the builder will only be entitled to the price when performance is complete. As the builder did not complete the work then they are not entitled to any part of the contract price.
Options A and B are wrong because the man did not promise to pay £500 for the clearance of the site. He agreed to pay the full price when the job was complete.
The builder is in breach of contract but the man does not appear to have suffered any loss. He has paid £9,750 for his new garage. This is less than the sum he agreed to pay the builder. As the man has suffered no loss, Option C is wrong.
A contractor agreed to design, craft and fit a new oak staircase in a client’s entrance hall for an agreed price of £14,000. The client paid the contractor £4,000 when the job was agreed, with the balance to be paid once the staircase was fitted.
The contractor completed the work but the client is unhappy with the staircase and is refusing to pay the contractor the balance of the price. The client has complained that whilst the oak and glass banister and the stair treads are excellent, the skirting along the walls is shoddy and the under stair panels do not fit flush with the banister, showing daylight between the joints. The client has had a quote of £1,500 to rectify these imperfections.
Which of the following statements provides the best advice for the client about the balance of the price?
The contractor will not be entitled to the balance of the price as the contractor has not performed the contract precisely and exactly.
The contractor will not be entitled to the full balance of the price, but will be entitled to the balance less the cost of putting right the defects.
The contractor will not be entitled to the full balance of the price, but will be entitled to either damages or a reasonable sum in restitution for what the contractor has done.
The contractor will be entitled to the full balance of the price as the contractor has substantially performed the contract.
The contractor will be entitled to the full balance of the price as the contractor has performed their obligations under the contract.
Option A is the best option as the doctrine of complete performance will apply. It is unlikely the contractor would be able to establish they have substantially performed the contract and that the work is only slightly defective, as the cost of rectifying the problem is more than 1/14th the contract price. As a result, options B and D are unlikely to be the best advice.
Option C is wrong as these remedies are usually applicable when a contracting party has been wrongly prevented from performing contractual obligations, and in this case the contractor has not been prevented from completing the contract.
Option E is wrong because the work is defective so the contractor has not completed the contract.
A client, a professional singer, signed a one-year contract with a record producing company (the ‘Company’) under which the client agreed not to work for any other record company during that time. However, the client has signed a contract with another company in breach of the restriction and the Company is seeking an injunction.
Which of the following statements best describes whether, or not, the Company’s action will succeed?
No: an injunction will not be ordered because it would have the effect of forcing the client to work for the Company.
No: damages would be adequate and it would be inequitable to grant an injunction.
No, because to order an injunction would be contrary to public policy as an undue restraint on earning a living.
Yes, because an injunction would not prevent the client from earning a living in any capacity other than as a singer.
Yes: as damages would be inadequate an injunction would be granted as of right to the Company.
Statement D is correct- Warner Bros Pictures v Nelson.
Statements A and C are wrong because an injunction would not stop the client earning a living in any capacity other than as a singer. The client could still work for example in retail.
Statement B is wrong as damages would not be adequate.
Statement E is wrong as injunctions are not granted as of right. They are a discretionary remedy.
A client contracted to sell a consignment of tracksuits for £10,000, payment to be within 10 days of delivery. The signed contract included the following term ‘Time for payment shall be of the essence’ ie a condition of the contract. The client delivered the tracksuits a month ago but has still not been paid for them.
What is the MOST APPROPRIATE remedy for the client?
Specific performance
Injunction
Damages
Action for the agreed sum
Termination
Statement D is correct. As a fixed amount of money is being claimed action for an agreed sum (ie the money owed) is the most appropriate remedy. Action for an agreed sum is a debt action.
A and B are wrong as monetary compensation will be adequate.
C is wrong. Damages are subject to limitations such as remoteness and mitigation. When a fixed sum is owed and claimed there are no such issues.
E is wrong because although ‘Time for payment shall be of the essence’ means it is a condition of the contract it would be too late for our client to terminate. The goods have been delivered and so there is no future performance to terminate.
A company (‘the Retailer’) entered into a contract with another company (‘the Supplier’) to buy 30,000 flat-pack boxes at a price of £60,000. The Retailer paid £20,000 in advance. When delivered the boxes were defective and the Supplier was unable to supply replacement boxes. The Retailer rejected the boxes and did not pay the balance of the purchase price. To avoid incurring further losses, the Retailer obtained replacement boxes from another supplier for £70,000.
Ignoring interest, what sum can the Retailer properly claim against the Supplier?
£70,000
£10,000
£30,000
£20,000
£60,000
C is correct. The retailer paid £20,000 in advance to the supplier. The supplier gave nothing in return for that – there was a total failure of consideration and so the retailer is entitled to be reimbursed £20,000 in restitution. In addition it has cost the retailer an extra £10,000 to buy similar goods elsewhere and so the retailer would be able to claim that sum as loss of expectation damages. The retailer took reasonable steps to mitigate its loss.
A and E are wrong as the retailer would have made a windfall profit as a result of the breach.
B is wrong because it does not take account of £20,000 paid in advance for which the retailer received nothing in return.
D is wrong as it ignores the extra money the retailer had to pay to buy replacement goods elsewhere.
A client company (the Client) entered into a written contract with another company (the Company) which was drafted by a director of the Company. One particular term of the contract was specifically defined as a ‘condition’. The term provided that over a long period, one of two named representatives of the Client would visit the Company every week. There was no provision to substitute other representatives and no provision for the Company to say a visit was inconvenient. One week the Company did not receive a visit as agreed and sought to terminate the contract.
Which ONE of the following statements best describes the legal position?
The term breached was defined as a condition and so the Company was entitled to terminate for any breach (however small).
The parties could not have intended the particular term to be a ‘condition’ in the legal sense and so damages would be the only remedy for breach.
Commercial contracts cannot be terminated for breach of a condition if the breach is so slight it would be unreasonable to terminate.
As the contract was between two companies and had been reduced into writing and signed the definition of the term as a ‘condition’ would be conclusive.
Terms in contracts drafted by non-lawyers are neither conditions nor warranties: the remedy for breach will always depend on the seriousness of the breach.
B is the correct statement. On the face of it the contract had not been drafted by a lawyer and the parties must have known the term would be breached at some time or another. Consequently, they could not have intended one breach to justify terminating the contract- Schuler v Wickman.
The fact the term had been defined as a condition would not be conclusive in the circumstances; hence statements A and D are wrong.
Statement C- a very slight breach of a condition is only a bar to rejecting goods in a commercial contract for the sale of goods (s15A Sale of Goods Act).
Statement E is wrong. As a matter of construction particular terms may have been intended to be warranties or conditions in the strict legal sense.
Which ONE of the following statements is WRONG?
If a contract is frustrated it is voidable.
If a contract is frustrated neither party will be in breach.
If a contract is frustrated it terminates automatically at the time of the frustrating event.
If a contract is frustrated neither party need perform any future obligations.
A is incorrect. A frustrated contract is not voidable – it comes to an end automatically at the time of the frustrating event and neither party need perform future obligations. All the other statements are correct.
Which ONE of the following cases illustrates that a party cannot rely on ‘self-induced’ frustration?
Krell v Henry
Herne Bay v Hutton
Davis Contractors v Fareham UDC
The Super Servant Two
the correct answer is D. Here the contract was not frustrated because the court said that the defendants had a choice
Is the following statement TRUE or FALSE?
In the case of Metropolitan Water Board v Dick Kerr the contract was not frustrated by the government intervention because the parties had put a ‘force majeure’ clause in their contract.
the statement is false. Although the parties had put a force majeure clause in their contract dealing with delay, the court decided that the clause was not intended to cover the event that had occurred.
Which ONE of the following statements is CORRECT?
A lease of land can never be frustrated.
A lease of land for less than two years can never be frustrated
A lease of land for any period may be frustrated.
A lease of land can only be frustrated if there are at least 3 years left to run on the lease.
C is the correct answer. The House of Lords case of National Carriers Ltd v Panalpina Ltd (1981) established that a lease of land could be frustrated but that this would not be a common occurrence.
Julie hired a holiday cottage, ‘Field View’, from Holiday Letts Ltd. for the month of August for £2,000. Julie paid £200 immediately and agreed to pay the balance of £1,800 on 31 August. Holiday Letts agreed to put locks on all of the cottage windows. On 5 August the cottage was destroyed by fire. Holiday Letts had spent £250 on fitting the window locks.
Assuming that the contract is frustrated and the Law Reform (Frustrated Contracts) Act (LR(FC)A) 1943 applies, which ONE of the following is CORRECT?
Julie will still have to pay the £1,800 due on the 31 August.
Under s1(2) of the LR(FC)A Holiday Letts can keep the £200 Julie paid on the making of the contract and Julie will have to pay a further £50 to cover the expenses incurred by Holiday Letts.
Under s1(2) of the LR(FC)A Julie could get back the £200 she paid on making the contract and would not have to pay anything to Holiday Letts for the expenses they incurred.
As Holiday Letts incurred expenses in performing the contract then under s1(2) of the LR(FC)A the court may allow Holiday Letts to retain some or all of the £200 Julie paid on making the contract
D is correct. If a contract is frustrated the parties are discharged from future obligations so Julie does not have to pay the £1,800. Section 1(2) of the LR(FC)A1943 provides that a court may allow a party who has incurred expenses in performing the contract to recover some or all of these but only out of money paid or payable before the frustrating event. So here the court may allow Holiday Letts to retain some or all of the £200 but this is the maximum they can get.
