Business Law Practice Exam

Are the following statements true or false?

1 A statute cannot override terms of a contract that have been expressly agreed between the parties.

2 All persons over 18 have capacity to enter into any contract.

• True

• False

• True

• False

A commercial contract for the sale of land, which is based on an agreement and is supported by consideration but which is not made in the correct form, is:

• Void

• Voidable

• Unenforceable

• Illegal

Matilda goes shopping in her local village store. Roses are on display priced at £2 each. Matilda has £6 in her purse and takes three roses to the counter to pay.

1. 1 Does the display of clearly priced roses constitute an offer which Matilda accepts when she picks up the roses?

2. 2 Can the shopkeeper refuse to sell the roses to Matilda?

• Yes

• No

• Yes

• No

Which of the following requirements need to be satisfied for a third party to seek to enforce a contractual term under the Contracts (Rights of Third Parties) Act 1999?

• That the contract expressly so provides

• That the third party must exist at the time the contract is made but need not be known to the parties

• That the third party must be identified in some way in the contract

• That the term to be enforced by the third party contains only positive rights

Antonia agrees to carry out a major building project for Bashir. She commences the works before the contract between the parties is executed, because their solicitors are still finalising some of its terms. After two weeks, Bashir has decided that he is not at all happy with the work so far completed by Antonia and plans to sue her for breach of contract. Which of the following best describes the legal position?

• Bashir must sue in tort because there is no contract between them.

• The terms of the contract will be those which have been agreed so far.

• The parties must finalise the contract before either party may sue the other for breach.

• A contract is likely to be deemed to exist and its terms will be a question of fact in all the circumstances.

Anna employs Derek to build a children’s playground in the grounds of her house. Derek finishes the work on time but omits to paint one side of the mega-slide frame. Which of the following best describes the legal position?

• Anna is not obliged to pay Derek until he completes the job exactly as required.

• Derek is entitled to full payment under the doctrine of substantial performance.

• Derek is entitled to payment of the contract price less a reasonable amount in respect of the omission made.

• Anna should seek an order of specific performance to ensure that the contract is completed.

Are the following statements true or false under the Law Reform (Frustrated Contracts) Act 1943?

1 Where a contract has been frustrated and B has derived no benefit from it, A may nonetheless retain a part of any deposit paid by B, in order to cover the cost of any expenses incurred in performance of the contract up to the time the contract was frustrated.

2 If either party has obtained a valuable benefit (other than the payment of money) under the contract before it is discharged by frustration, the court has a discretion to order that party to pay all or part of that value

• True

• False

Fred contracts with Ginger to perform a solo dancing routine for seven consecutive nights beginning on 15 May. On 5 May Fred tells Ginger that he has had a better offer elsewhere and will no longer be available to perform as agreed. Are the following statements true or false? Fred’s breach deprives Ginger of substantially the whole benefit of the contract and automatically discharges the contract.

• True

• False

There are a number of rules that must be met in order for an exclusion clause to be considered incorporated and enforceable in a contract. Which of the following statements in regard to exclusion clauses is correct?

• An exclusion clause is interpreted in favour of the person relying on it.

• An exclusion clause can remove all liability for a party in regard to their breach of contract.

• The contract must be signed for an exclusion clause to be validly incorporated.

• An exclusion clause will not be validly incorporated in a signed contract if both parties failed to read it.

Which of the following statements in relation to a contract made by an agent acting within their authority is incorrect?

• The principal can sue on the contract.

• The third party can sue on the contract.

• The agent can be sued on the contract.

• The principal can be sued on the contract.