SQE CONTRACT LAW TEST BANK
QUESTIONS WITH 100%
CORRECT ANSWERS
What rights does a customer have for breach of term in service contract? - Answer-
Right to require repeat performance (where reasonable) or a price reduction
What is the reasonableness test for exemption clauses in business-business contracts?
- Answer-Clause must have been a fair and reasonable one to be included in the
contract, by taking into account all circumstances including what parties knew or ought
to have known at that point in time
What can a defendant never exclude or restrict their liability for through an exemption
clause? - Answer-Death/personal injury caused by negligence
What should court have regard to when determining the reasonableness of a business-
business contract exemption clause? - Answer-Resources defendant could expect to be
available to them for purpose of meeting the liability
How far it was open to the defendant to take out insurance cover
Whether customer knew/ought to have reasonable known of the existence of the clause
Relative strength of bargaining positions of parties,
Did customer receive an inducement to agree to exemption clause
Whether it was reasonable at time of contract to expect that compliance with condition
would be practicable
In a business-consumer contract, what are the limitations on exclusion clauses? -
Answer-Most terms implied by CRA 2015 (eg satisfactory quality, fit for purpose, be as
described) CANNOT be excluded or limited. Trader cannot exclude liability for breach of
reasonable care and skill and cannot restrict liability for breach of reasonable price and
time if it would prevent customer getting a refund where appropriate
Can third parties rely on an exemption clause? - Answer-Generally no unless a third
party is named in an exemption clause or identified as a member of a class entitled to
benefit from it
When deciding damages for breach of contract, what will the court aim to do? - Answer-
Provide compensation for loss claimant suffers as a result of breach of contract.
What will the courts consider when assessing remoteness of damage when determining
damages? - Answer-Relies on whether loss would have been in the reasonable
, contemplation of parties at the time of contract as being a likely consequence of the
breach. As long as loss is not too remote, the extent of loss is irrelevant
Who has the burden of proof when proving mitigation of loss? - Answer-Defendant has
the burden of showing the claimant has failed to mitigate their loss
How are damages quantified? - Answer-Usually cost of reinstatement. For defective
goods, the difference in value between goods are they are and goods as they are
expected to be
What is a specified damages clause? - Answer-An attempt to pre-estimate the loss
likely to be caused by the breach. Clause is binding and sum specified is the amount
that will be paid regardless of actual loss suffered so long as the clause is not found to
be a penalty. Remoteness and mitigation rules would not apply
What is a penalty clause? - Answer-A liquidated damages clause which requires the
party in breach to pay an excessive sum, such that it becomes a penalty, and therefore
the clause will not be upheld. Court will be free to assess damages in the usual away
What are other equitable remedies for breach of contract? - Answer-Debt action (more
direct than damages). Specific performance (discretion of the court, only when just and
equitable to do so). Injunction (where damages are inadequate)
When does right to terminate arise? - Answer-Where there is a breach of a condition;
where there is a very serious breach of an innominate term.
What actions bar right to termination? - Answer-Contract being affirmed or contract
already being performed
When is a contract frustrated? - Answer-When an unforeseen event beyond either
party's control makes the performance of the contract impossible or radically different.
What is a 'force majeure' clause? - Answer-A provision for the unexpected clause-
means there is no need for doctrine of frustration. Illegality can never be provided for
and force majeure clauses will have to satisfy reasonableness test to be upheld
What are the consequences of a contract being frustrated? - Answer-Contracted is
terminated automatically as a matter of law. Money paid before the event can be
recovered if there was a total failure of consideration; money that should have been
paid before event need not be paid.
At court's discretion, expenses incurred by payee can be recovered out of total sums
paid/payable before event.
IF one party has conferred a valuable benefit on other party before frustration, court
may order a just sum to be paid by recipient for that benefit
QUESTIONS WITH 100%
CORRECT ANSWERS
What rights does a customer have for breach of term in service contract? - Answer-
Right to require repeat performance (where reasonable) or a price reduction
What is the reasonableness test for exemption clauses in business-business contracts?
- Answer-Clause must have been a fair and reasonable one to be included in the
contract, by taking into account all circumstances including what parties knew or ought
to have known at that point in time
What can a defendant never exclude or restrict their liability for through an exemption
clause? - Answer-Death/personal injury caused by negligence
What should court have regard to when determining the reasonableness of a business-
business contract exemption clause? - Answer-Resources defendant could expect to be
available to them for purpose of meeting the liability
How far it was open to the defendant to take out insurance cover
Whether customer knew/ought to have reasonable known of the existence of the clause
Relative strength of bargaining positions of parties,
Did customer receive an inducement to agree to exemption clause
Whether it was reasonable at time of contract to expect that compliance with condition
would be practicable
In a business-consumer contract, what are the limitations on exclusion clauses? -
Answer-Most terms implied by CRA 2015 (eg satisfactory quality, fit for purpose, be as
described) CANNOT be excluded or limited. Trader cannot exclude liability for breach of
reasonable care and skill and cannot restrict liability for breach of reasonable price and
time if it would prevent customer getting a refund where appropriate
Can third parties rely on an exemption clause? - Answer-Generally no unless a third
party is named in an exemption clause or identified as a member of a class entitled to
benefit from it
When deciding damages for breach of contract, what will the court aim to do? - Answer-
Provide compensation for loss claimant suffers as a result of breach of contract.
What will the courts consider when assessing remoteness of damage when determining
damages? - Answer-Relies on whether loss would have been in the reasonable
, contemplation of parties at the time of contract as being a likely consequence of the
breach. As long as loss is not too remote, the extent of loss is irrelevant
Who has the burden of proof when proving mitigation of loss? - Answer-Defendant has
the burden of showing the claimant has failed to mitigate their loss
How are damages quantified? - Answer-Usually cost of reinstatement. For defective
goods, the difference in value between goods are they are and goods as they are
expected to be
What is a specified damages clause? - Answer-An attempt to pre-estimate the loss
likely to be caused by the breach. Clause is binding and sum specified is the amount
that will be paid regardless of actual loss suffered so long as the clause is not found to
be a penalty. Remoteness and mitigation rules would not apply
What is a penalty clause? - Answer-A liquidated damages clause which requires the
party in breach to pay an excessive sum, such that it becomes a penalty, and therefore
the clause will not be upheld. Court will be free to assess damages in the usual away
What are other equitable remedies for breach of contract? - Answer-Debt action (more
direct than damages). Specific performance (discretion of the court, only when just and
equitable to do so). Injunction (where damages are inadequate)
When does right to terminate arise? - Answer-Where there is a breach of a condition;
where there is a very serious breach of an innominate term.
What actions bar right to termination? - Answer-Contract being affirmed or contract
already being performed
When is a contract frustrated? - Answer-When an unforeseen event beyond either
party's control makes the performance of the contract impossible or radically different.
What is a 'force majeure' clause? - Answer-A provision for the unexpected clause-
means there is no need for doctrine of frustration. Illegality can never be provided for
and force majeure clauses will have to satisfy reasonableness test to be upheld
What are the consequences of a contract being frustrated? - Answer-Contracted is
terminated automatically as a matter of law. Money paid before the event can be
recovered if there was a total failure of consideration; money that should have been
paid before event need not be paid.
At court's discretion, expenses incurred by payee can be recovered out of total sums
paid/payable before event.
IF one party has conferred a valuable benefit on other party before frustration, court
may order a just sum to be paid by recipient for that benefit
