LW4 Recap

Which of the following best defines valid consideration in contract law?

• A mutual exchange of value between parties

• A written promise to gift something later

• A verbal promise not supported by any value

Answer explanation

Valid consideration in contract law is defined as a mutual exchange of value between parties, meaning both sides provide something of value. The other options do not involve this exchange, making them invalid.

Why is past consideration usually not valid in forming a contract?

• It is based on future obligations

• It wasn’t part of a mutual bargain at the time of agreement

• It only benefits the promisor

Answer explanation

Past consideration is not valid because it was not part of a mutual bargain at the time of agreement. Contracts require that both parties exchange something of value at the time the agreement is made.

Which statement about intention to create legal relations is correct?

• Business agreements are presumed not to be legally binding

• Courts never enforce social agreements

• Commercial agreements are presumed to be legally binding

Answer explanation

Commercial agreements are generally presumed to be legally binding, reflecting the intention of the parties to create enforceable obligations. In contrast, social agreements lack this presumption.

When can a minor be legally bound by a contract?

• If the contract involves necessary goods or services

• Only with parental consent

• If it is over £500 in value

Answer explanation

A minor can be legally bound by a contract if it involves necessary goods or services, such as food or medical care, which are essential for their well-being.

What does it mean if a contract is voidable?

• It is automatically cancelled by law

• It remains valid unless one party chooses to cancel it

• It was never legally formed in the first place

Answer explanation

A voidable contract is valid until one party decides to cancel it. This means it remains enforceable unless the affected party chooses to void it, distinguishing it from a void contract, which is never valid.

Which of the following best represents economic duress?

• False advertising about product quality

• A signed agreement witnessed by a solicitor

• Pressuring someone financially to accept unfair terms

Answer explanation

Economic duress occurs when one party pressures another financially to accept unfair terms. This choice accurately reflects that concept, unlike false advertising or a signed agreement, which do not involve coercion.

What remedy is available under the Misrepresentation Act 1967?

• An automatic refund without legal action

• The right to claim damages or rescind the contract

• A fine issued to the misrepresenting party

Answer explanation

Under the Misrepresentation Act 1967, the correct remedy is the right to claim damages or rescind the contract. This allows the affected party to seek compensation or cancel the agreement due to false statements.

What is the consequence of breaching a ‘condition’ in a contract?

• The innocent party may cancel the contract and claim damages

• Only a warning is issued by the court

• It is treated the same as a breach of warranty

Answer explanation

Breaching a 'condition' allows the innocent party to cancel the contract and seek damages, as it is a significant term. This distinguishes it from a breach of warranty, which does not permit cancellation.

What does the Unfair Contract Terms Act 1977 specifically restrict?

• The use of handwritten contracts

• Exclusion of liability for negligence causing death or serious injury

• Verbal amendments to written contracts

Answer explanation

The Unfair Contract Terms Act 1977 specifically restricts the exclusion of liability for negligence that causes death or serious injury, ensuring that such liabilities cannot be waived in contracts.

Which of the following is a remedy where a court orders the contract to be carried out exactly as agreed?

• Rescission

• Injunction

• Specific performance

Answer explanation

Specific performance is a legal remedy where a court orders the parties to fulfill their contractual obligations exactly as agreed, making it the correct choice. Rescission cancels the contract, and injunctions prevent actions.