starts to perform the contract without writing back to Y Ltd. Which one of the fol- lowing statements is correct?
(A) There is no contract.
(B) There is a contract on X Ltd’s terms. (C) There is a contract on Y Ltd’s terms.
(D) There is a contract on reasonable terms to be settled by the courts.
1.8 Which of the following statements is correct?
(A) Misrepresentation always renders the contract voidable.
(B) Misrepresentation always gives the party deceived an absolute right to damages. (C) The contract is only voidable if the party deceived can prove that the misrepre-
sentation was negligent.
(D) The contract only gives a right to damages if the party deceived can prove that the misrepresentation was negligent.
Question 2
Beryl enters a shop to purchase a new dress. She tells the shop assistant that she would like to buy the blue dress which is displayed in the shop window and priced at £100. The assistant
removes the dress from the window for Beryl, but when she tries to pay for it at the till the man- ager informs her that it is not for sale. He tells her that the dress is for display purposes only.
Requirement
Delete as appropriate and complete the following sentences:
Beryl is/is not (1 mark) entitled to the dress because the display of the dress in the shop window constitutes an ……… (3 words) (2 marks) and not an ……… (1 word)
(2 marks). It follows that Beryl does not have/has (1 mark) a contract with the shop own-
ers who have/have not (1 mark) acted in breach of contract. (Total marks ⴝ 7)
Question 3
Vendor owned a factory. He persuaded Mr Purchaser to sign a contract to buy it, and to pay a deposit of £50,000. During negotiations he told Purchaser that the local authority had no plans to build a rumoured road nearby. In fact the local authority had decided to build the road and was about to commence work. This might have been discovered by checking at the Town Hall, but Vendor genuinely believed what he had said.
Requirement
Delete as appropriate and complete the following sentences:
Vendor appears to have made a ……… (1 word) (2 marks) to Purchaser. This renders the contract ……… (1 word) (2 marks) and if Purchaser acts quickly, he will be able to ……… (1 word) (1 mark) the contract which means that Vendor and Purchaser will be returned to their pre-contract position. Purchaser will/will not (1 mark) be obliged to pay the rest of the price and he will/will not (1 mark) be able to recover his deposit. In addi- tion Purchaser may be able to recover damages from Vendor unless Vendor can show that he was not negligent under the ……… Act 1967 (1 word) (1 mark). (Total marks ⴝ 8)
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Solution 1
1.1 Answer: (B)
Most contracts are binding irrespective of their form, and in this respect are described as ‘simple’, (A) which refers to written contracts is therefore inaccurate. The number of provisions as identified in (C) is of no relevance. Further, a contract is only recog- nised where consideration is provided by both parties, therefore ( D) cannot be correct.
1.2 Answer: (B)
Both (A) and (C) are incorrect as no contract between A Ltd and B Ltd exists. B has merely made an offer. Whether or not B Ltd has paid for the television sets is on the facts of no significance. The offer made by B Ltd would have to be accepted by A Ltd for a contract to exist.
1.3 Answer: (C)
(A) is not true, because Mark did not accept Dennis’s offer in full, by the fact that he introduced a further term, that is that he would pay in two months’ time. B is not true, because Mark did not request further information. (C) is the correct answer, because Mark is trying to impose his own terms, and thus is making a counter-offer which is capable in turn of acceptance, and which destroys Dennis’s original offer. See Hyde v.
Wrench (1840). ( D) is not correct, because the language used indicates that a definite
offer is being made by Dennis, indicating a definite intention to be bound.
1.4 Answer: (D)
(A) is true: consideration cannot consist of work already done, or goods already deliv- ered, as the benefit has been received. (B) is true: only the person who has given value in relation to the contract may enforce it. (C) is also true: although normally a prom- ise is not enforceable as lacking consideration, it may be enforceable if contained in a deed. ( D) is untrue, and therefore the right answer. Consideration need not be ade- quate, as parties will not be protected by the courts where they make a bad bargain.
1.5 Answer: ( B)
A promise to accept less than the full contract price due is unenforceable unless the promise is ‘brought’, in other words consideration for the promise is provided. A party can therefore go back on a promise in isolation to accept a lesser sum. ( B) is therefore the correct answer.
Solutions to
1.6 Answer: (A)
Many contracts of sale, for example when a small item is bought in a shop or when a passenger pays a bus fare, are unwritten. Statement (A) is therefore the correct answer. But to be valid in law, all contracts, unwritten as well as written, must meet a number of conditions. Intention to form a legal contract must exist, hence statement (B) is incorrect. Statement (D) is also incorrect because the objects clause in the Memorandum of Association of a company may restrict that company’s contracted capacity. The law of contract is of course part of the civil law and not the criminal law, which renders statement (C) wrong.
1.7 Answer: (C)
There is a contract: Y Ltd has made a counter-offer, which X Ltd has impliedly accepted by acting on it (A). Y Ltd by his counter-offer has impliedly rejected X Ltd’s standard terms (B). There is no need (or right) for a court to settle reasonable terms (D).
1.8 Answer: (A)
The contract is voidable even for innocent misrepresentation (C). Damages are not available as of right if the deceiver can prove that he was innocent (B). The party deceived does not need to prove negligence, however; it is for the deceiver to prove that he was not negligent (D).
Solution 2
Beryl is not entitled to the dress because the display of the dress in the shop window with a price tag constitutes an invitation to treat and not an offer to sell. It follows that Beryl does not
have a contract with the shop owners who have notacted in breach of contract.
Solution 3
Vendor appears to have made a misrepresentation to Purchaser. This renders the contract void-
able and if Purchaser acts quickly, he will be able to rescind the contract which means that
Vendor and Purchaser will be returned to their pre-contract position. Purchaser will not be obliged to pay the rest of the price and he will be able to recover his deposit. In addition Purchaser may be able to recover damages from Vendor unless Vendor can show that he was not negligent under the Misrepresentation Act 1967.
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SOLUTIONS TO REVISION QUESTIONS C5