Contract law - MCT practice questions
Which one of the following statements is false?
Terms can be:
(a) implied by the courts
(b) implied by statute
(c) never be implied because they are only binding if expressly agreed to by both parties
(d) implied by custom correct answers C
Which one of the following statements is false?
(a) The general rule is that a person is bound by their signature.
(b) A person is not bound by their signature if the contractual terms
were misrepresented.
(c) Terms can be incorporated by reasonable notice.
(d) Terms cannot be incorporated based on a previous course of
dealing between the parties correct answers D
In relation to a claim for the contract price, which one of the following statements is not
true?
1. The claim is not subject to the test of remoteness.
2. The claim is not subject to the mitigation principle.
3. A liquidated damages clause in the contract does not apply to the claim.
4. The claim arises from a breach of contract by the defendant.
5. The purpose of the claim is to enforce the defendant's contractual obligation (the
promise to pay). correct answers A - The claim arises from a breach of contract by the
defendant
The claim arises when the claimant has performed its obligations, which give rise to the
obligation to make payment. A breach by the defendant does not cause the liability to
pay the contract price to arise. A claim for the contract price is a debt claim and is not
subject to restrictions over recoverable loss in relation to a damages claim, such as the
test of remoteness and mitigation principles. The amount of the debt is the amount
recoverable. A liquidated damages clause applies only to a damages claim. The agreed
sum under that clause is recovered as a substitute for the loss suffered by the non-
breaching party-but this is different to a claim for the contract price in a debt claim.
5. Photo Me! was engaged by Fiona to take the official photographs during Fiona's
birthday celebrations. In breach of its contractual obligation to deliver Fiona's portrait
photographs taken during her celebrations, Photo Me! is attempting to resell the
,photographs to a third party. Which one of the following most accurately describes the
parties' legal position?
(a) The photographs are unique to Fiona, with no substitute available, so it is likely that
a specific performance will be awarded.
(b) It is unlikely that Fiona will be awarded specific performance because it is generally
unavailable as a remedy, but she will be entitled to an account of any profits made by
Photo-Me!
(c) Fiona's most likely remedy is substantial damages, awarded according to her lost
expectation.
(d) Fiona's most likely remedy is substantial damages, awarded according to the
disappointment and distress she will have suffered.
(e) Fiona correct answers A
The most appropriate remedy here is specific performance. Specific performance may
be available where damages would be inadequate. The most obvious case, as here, is
where substitute performance is unavailable. Fiona's portrait photographs taken during
her birthday party are unique to her with no substitute available.
Atif enters a contract to sell 1,000 tons of steel to Kane and then refuses to proceed
with the transaction. Because there is a worldwide shortage of steel, Kane applies for
an order of specific performance. Which one of the following most accurately describes
the parties' legal position?
(a) Kane can obtain the equitable remedy of specific performance as of right.
(b) The worldwide shortage of steel is irrelevant to the question of whether specific
performance will be awarded. incorrect
(c) The worldwide shortage of steel probably means the contract is frustrated.
(d) There is no burden on Kane to show that damages would be an inadequate remedy,
as the matter is at the discretion of the court.
(e) Specific performance will probably be awarded by the court. correct answers E
Specific performance may be granted where substitute performance is unavailable. In
commercial settings, rarity in absolute terms may not be necessary to establish the
unavailability of substitute performance. It suffices that, within the relevant contract time
limits, substitute performance cannot be obtained: Sky Petroleum Ltd v VIP Petroleum
Ltd [1974] 1 All ER 954. Specific performance is not available as of right: it is a
discretionary remedy and a court is not bound to make such an award. The burden is on
Kane (as the non-breaching party) to show that damages would be an inadequate
remedy.
Sid enters a contract to grant a lease to Anisa in return for Anisa's promise to repair the
premises personally. When Anisa has completed 80% of the repair work, Sid refuses to
proceed with the transaction and denies Anisa access to the premises. Anisa applies for
an order of specific performance. Which one of the following most accurately describes
the parties' legal position?
(a) Specific performance will probably be precluded by the principle of mutuality.
, (b) Specific performance will not be awarded as it would result in hardship for Sid.
(c) Specific performance will probably be awarded.
(d) Specific performance will be denied on the basis that it would interfere with Sid's
personal liberty.
(e) Specific performance will be awarded as of right unless Sid can prove that it should
not be awarded on the facts. correct answers C
The scenario of the contract to grant a lease in return for a promise to repair premises
personally is similar to Price v Strange [1978] Ch 337. Although Anisa's promise is
generally not specifically enforceable, the application of the principle of mutuality will not
prohibit Anisa's application for specific performance. The reason is that, as Anisa
performed 80 per cent of the repair work and is prevented from completing it only by
Sid's breach, there is no risk of hardship to Sid in granting specific performance.
1. Issy Ltd agrees to repair Victor's broken mill shaft and to return it to Victor within a
week. At the time of contracting, Victor points out that he has no spare mill shaft and
that he will not be able to operate his mill until the repaired one has been returned. Issy
Ltd does not return the repaired shaft until two weeks later. Victor brings an action
against Issy Ltd for breach of contract, claiming damages for the loss of profit during the
second week, when his mill was closed as a result of Issy Ltd's delay. Issy Ltd argues
that the damages claimed by Victor are too remote to be recoverable. In considering the
approach taken in Hadley v Baxendale (1854) 9 Ex 341, which one of the following
statements concerning Issy Ltd's argument is true?
The damages claimed by Victor are not too remote, because his loss of profit is a
natural or normal loss resulting from Issy Ltd's breach of contract.
The damages claimed b correct answers
A misrepresentee has entered into a contract as a result of a misrepresentation. The
misrepresentee wishes to sue the misrepresentor in order to claim damages. The
misrepresentee wishes to recover as much in damages possible.
The misrepresentee knows that the misrepresentation was at least negligent. The
misrepresentee is not sure whether or not the misrepresentation was fraudulent.
What claim should the misrepresentee make? correct answers A Claim under s2(1)
Misrepresentation Act 1967
Why: The claimant is not sure whether the statement was fraudulent. Remember that
fraud carries a high burden of proof.
In any case, the decision in Royscot indicates that damages under s2(1) are assessed
in the same way as for fraud, and has a much lower burden of proof on a claimant,
evident in the wording of the section itself and the decision and the decision in Howard
Marine.
Mario recently purchased an ice cream truck from Wallis. Mario drove the truck only
once. Following this, Mario then discovered that Wallis had made a fraudulent
Which one of the following statements is false?
Terms can be:
(a) implied by the courts
(b) implied by statute
(c) never be implied because they are only binding if expressly agreed to by both parties
(d) implied by custom correct answers C
Which one of the following statements is false?
(a) The general rule is that a person is bound by their signature.
(b) A person is not bound by their signature if the contractual terms
were misrepresented.
(c) Terms can be incorporated by reasonable notice.
(d) Terms cannot be incorporated based on a previous course of
dealing between the parties correct answers D
In relation to a claim for the contract price, which one of the following statements is not
true?
1. The claim is not subject to the test of remoteness.
2. The claim is not subject to the mitigation principle.
3. A liquidated damages clause in the contract does not apply to the claim.
4. The claim arises from a breach of contract by the defendant.
5. The purpose of the claim is to enforce the defendant's contractual obligation (the
promise to pay). correct answers A - The claim arises from a breach of contract by the
defendant
The claim arises when the claimant has performed its obligations, which give rise to the
obligation to make payment. A breach by the defendant does not cause the liability to
pay the contract price to arise. A claim for the contract price is a debt claim and is not
subject to restrictions over recoverable loss in relation to a damages claim, such as the
test of remoteness and mitigation principles. The amount of the debt is the amount
recoverable. A liquidated damages clause applies only to a damages claim. The agreed
sum under that clause is recovered as a substitute for the loss suffered by the non-
breaching party-but this is different to a claim for the contract price in a debt claim.
5. Photo Me! was engaged by Fiona to take the official photographs during Fiona's
birthday celebrations. In breach of its contractual obligation to deliver Fiona's portrait
photographs taken during her celebrations, Photo Me! is attempting to resell the
,photographs to a third party. Which one of the following most accurately describes the
parties' legal position?
(a) The photographs are unique to Fiona, with no substitute available, so it is likely that
a specific performance will be awarded.
(b) It is unlikely that Fiona will be awarded specific performance because it is generally
unavailable as a remedy, but she will be entitled to an account of any profits made by
Photo-Me!
(c) Fiona's most likely remedy is substantial damages, awarded according to her lost
expectation.
(d) Fiona's most likely remedy is substantial damages, awarded according to the
disappointment and distress she will have suffered.
(e) Fiona correct answers A
The most appropriate remedy here is specific performance. Specific performance may
be available where damages would be inadequate. The most obvious case, as here, is
where substitute performance is unavailable. Fiona's portrait photographs taken during
her birthday party are unique to her with no substitute available.
Atif enters a contract to sell 1,000 tons of steel to Kane and then refuses to proceed
with the transaction. Because there is a worldwide shortage of steel, Kane applies for
an order of specific performance. Which one of the following most accurately describes
the parties' legal position?
(a) Kane can obtain the equitable remedy of specific performance as of right.
(b) The worldwide shortage of steel is irrelevant to the question of whether specific
performance will be awarded. incorrect
(c) The worldwide shortage of steel probably means the contract is frustrated.
(d) There is no burden on Kane to show that damages would be an inadequate remedy,
as the matter is at the discretion of the court.
(e) Specific performance will probably be awarded by the court. correct answers E
Specific performance may be granted where substitute performance is unavailable. In
commercial settings, rarity in absolute terms may not be necessary to establish the
unavailability of substitute performance. It suffices that, within the relevant contract time
limits, substitute performance cannot be obtained: Sky Petroleum Ltd v VIP Petroleum
Ltd [1974] 1 All ER 954. Specific performance is not available as of right: it is a
discretionary remedy and a court is not bound to make such an award. The burden is on
Kane (as the non-breaching party) to show that damages would be an inadequate
remedy.
Sid enters a contract to grant a lease to Anisa in return for Anisa's promise to repair the
premises personally. When Anisa has completed 80% of the repair work, Sid refuses to
proceed with the transaction and denies Anisa access to the premises. Anisa applies for
an order of specific performance. Which one of the following most accurately describes
the parties' legal position?
(a) Specific performance will probably be precluded by the principle of mutuality.
, (b) Specific performance will not be awarded as it would result in hardship for Sid.
(c) Specific performance will probably be awarded.
(d) Specific performance will be denied on the basis that it would interfere with Sid's
personal liberty.
(e) Specific performance will be awarded as of right unless Sid can prove that it should
not be awarded on the facts. correct answers C
The scenario of the contract to grant a lease in return for a promise to repair premises
personally is similar to Price v Strange [1978] Ch 337. Although Anisa's promise is
generally not specifically enforceable, the application of the principle of mutuality will not
prohibit Anisa's application for specific performance. The reason is that, as Anisa
performed 80 per cent of the repair work and is prevented from completing it only by
Sid's breach, there is no risk of hardship to Sid in granting specific performance.
1. Issy Ltd agrees to repair Victor's broken mill shaft and to return it to Victor within a
week. At the time of contracting, Victor points out that he has no spare mill shaft and
that he will not be able to operate his mill until the repaired one has been returned. Issy
Ltd does not return the repaired shaft until two weeks later. Victor brings an action
against Issy Ltd for breach of contract, claiming damages for the loss of profit during the
second week, when his mill was closed as a result of Issy Ltd's delay. Issy Ltd argues
that the damages claimed by Victor are too remote to be recoverable. In considering the
approach taken in Hadley v Baxendale (1854) 9 Ex 341, which one of the following
statements concerning Issy Ltd's argument is true?
The damages claimed by Victor are not too remote, because his loss of profit is a
natural or normal loss resulting from Issy Ltd's breach of contract.
The damages claimed b correct answers
A misrepresentee has entered into a contract as a result of a misrepresentation. The
misrepresentee wishes to sue the misrepresentor in order to claim damages. The
misrepresentee wishes to recover as much in damages possible.
The misrepresentee knows that the misrepresentation was at least negligent. The
misrepresentee is not sure whether or not the misrepresentation was fraudulent.
What claim should the misrepresentee make? correct answers A Claim under s2(1)
Misrepresentation Act 1967
Why: The claimant is not sure whether the statement was fraudulent. Remember that
fraud carries a high burden of proof.
In any case, the decision in Royscot indicates that damages under s2(1) are assessed
in the same way as for fraud, and has a much lower burden of proof on a claimant,
evident in the wording of the section itself and the decision and the decision in Howard
Marine.
Mario recently purchased an ice cream truck from Wallis. Mario drove the truck only
once. Following this, Mario then discovered that Wallis had made a fraudulent
