2016 CONTRACT LAW

2016 (ZONE A)

Candidates should answer FOUR of the following EIGHT questions.

Candidates should answer all parts of a question unless otherwise stated.

1. The Head of the School of Textiles at Lastchance University thinks students do not take
enough exercise. On Monday he announces over Campus Radio that he will donate a
signed copy of his latest book to any student who cycles from the University to the nearby
Museum of Basket Weaving before the weekend. On Tuesday he regrets his rash offer and
puts up posters in the School retracting his offer. On Thursday he announces the offer is
withdrawn over Campus Radio. Advise the following students:

(a) Devi, who cycled to the Museum on Monday afternoon but was not aware of the
offer until she arrived.
(b) Ellis, who, having heard the offer on campus radio on Monday, trained all day
Tuesday and cycled to the Museum on Wednesday.
(c) Fred, who was told by another student about the withdrawal of the offer just as he
was about to set out on Wednesday. He said ‘they can’t do that’ and completed the
ride.
(d) Gina, who, having heard of the offer on Monday, was too drunk on Tuesday and
Wednesday to go to the campus but who set out on her bike on Thursday. She was
half way to the Museum when she heard the withdrawal over the radio.
(e) As (d) but the prize offered was £5,000.

2. Ahmed says to Jane, “Would you like to buy my computer for £300?” Jane agrees to buy
it. Advise Ahmed in each of the following alternative circumstances:

(a) Jane intends to buy the laptop computer that Ahmed was using when he made the
offer. Ahmed intended to sell an old desktop computer that he has at home and no
longer uses.
(b) Ahmed only owns one computer. English is not his first language and he often
confuses the words three and nine when speaking. Jane realises that Ahmed has
probably made a mistake in that he meant to sell his computer for £900.
(c) Ahmed thinks that his mother has bought him a new computer as a birthday
present. In fact she has bought him a new television.
(d) Unknown to Ahmed his only computer was destroyed in a gas explosion at his home
which took place an hour before his conversation with Jane.
(e) Both Ahmed and Jane think that Ahmed’s only computer has the latest Pentium 10
processor. In fact it has a much less powerful Pentium 6 processor.

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3. Critically evaluate TWO of the following statements:

(a) The supposed distinction between a mistake as to ‘identity’ and a mistake as to

‘attributes’ is impossible to apply.
(b) Only physical threats will constitute duress sufficient to vitiate a contract; threats of
mere economic harm will not.
(c) The distinction between an invitation to treat and a contractual offer is an elusive
one.
(d) The so called ‘parole evidence rule’ should be abolished.

4. ‘In the past the courts have used various devices to indirectly control the use of exemption
clauses. These techniques are now less important because of the direct statutory regulation
of this type of contractual clause.’

Critically evaluate this statement.

5. Lord Grantam is short of money. He decides he will have to sell the cherished motorcycle
his uncle gave him. His uncle told him it was the motorcycle that won the last Le Mans race
before the Second World War began and was in ‘perfect original condition’.

Lord Grantam takes the motorcycle to “Vintage Motorcycle Sales”. While a garage
employee, Mike, is inspecting a motorcycle, Lord Grantam says:

“Don’t worry old boy. I can assure you that it is a perfect pre-war motorcycle and has never
had a crash. I know you need to be sure so keep it for a week to check it out.”

As he left Lord Grantam gave Mike a thick file of documents about the bike.

The following evening Lord Grantam invites his uncle to dinner to tell him that he is going
to have to sell the motorcycle. Lord Grantham is concerned that his uncle may be upset
but his uncle tells him not to worry as he had made up the story about it being a famous
race winner. In fact it is made up from parts obtained from motorcycles that crashed after
the war.

Next week Vintage Motorcycle Sales’ expert valuer is off sick and nobody looks at the
documentation. An inspection by an expert would have immediately revealed that it was
made of post war parts and the documents would have confirmed that it was not the
famous race winner.

When Lord Grantam returns to Vintage Motorcycle Sales he is offered and accepts £50,000
for the motorcycle which is in fact worth only £500. The true value of the motorcycle is
only discovered several months later. If the motorcycle had been the famous race winner
Lord Grantam originally believed it to be it would have been worth £100,000.

Advise Vintage Motorcycle Sales.

6. ‘The doctrine of restraint of trade performs a valuable role in relation to contracts of

employment but less so in relation to contracts for the sale of a business.’

Critically evaluate this statement.

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7. The Strolling Bones are an ageing rock band who now enjoy the better things in life. They
contract with Excess University Student Law Society to appear at their annual dinner for
a fee of £200,000 and 20 cases of Chateau Latour wine. It is agreed that the fee shall be
payable and the wine deliverable in two stages: half on signing and half on the day of the
performance. The Student Law Society make the first payment but do not deliver any wine
to the band. The Strolling Bones pay a non- refundable deposit of £5,000 when they book
two large lorries to transport their equipment. The Student Law Society spend a large sum
of money on publicity. The venue at which the annual dinner is to take place fails its safety
inspection the day before the performance and the dinner is cancelled.

Advise the Strolling Bones as to their rights and liabilities.

8. In January 2015, Professor Dim signed a contract with Cambridge Academic Press (CAP)
to write a book on contract law in their prestigious Masterclass series. Dim was to be paid
£20,000 and CAP had an option to employ Dim to write a companion book on property
law for a £25,000 fee. Over the next year Dim spent £5,000 on books and travel to libraries
while working on his new book. In January 2016 in breach of contract CAP terminate the
contract with Dim because CAP had recently contracted with Professor Genius to write a
contract law book in the Masterclass series. CAP invited Dim to publish his contract book
for a fee of £100 in a new series aimed at school students. The Head of the School of Law
had promised Dim that he would receive a special payment of £10,000 if his book was
published in the Masterclass series. Dim writes to CAP telling them he feels humiliated
by the way he has been treated and pointing to a clause in their contract which he had
inserted before the parties signed and which CAP overlooked:

If the contract is terminated by the publishers in breach of contract, they shall pay to the
author a penalty of £10,000.

Advise Dim as to what remedies he is entitled to in respect of CAP’s breach of

contract.

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 Compilation of Past Years’ Questions

2016 (ZONE B)

Candidates should answer FOUR of the following EIGHT questions.

Candidates should answer all parts of a question unless otherwise stated.

1. Lord Aristo is an art collector. His favourite painting, Bacon’s ‘Pope Pious’, is stolen. Lord
Aristo places an advertisement in the Times newspaper offering a reward of £100,000
to anyone who is able to locate the painting. Advise Lord Aristo in each of the following
alternative circumstances:

(a) Canon, a private investigator, is employed by Lord Aristo’s insurance company to

recover the picture. Canon locates the picture and claims the reward.
(b) Devi sees the advertisement, locates the picture and claims the reward. Devi does
not see an advertisement placed in the Independent newspaper withdrawing the
offer of a reward before he finds the picture.
(c) Vera, a police detective working on the theft, locates the picture and claims the
reward.
(d) Baron Bluster, a friend of Lord Aristo, begins an extensive search for the painting. He
telephones Lord Aristo to tell him that he will be meeting an informer that evening
who will tell him where the painting is. Lord Aristo tells Baron Bluster not to bother
because he has changed his mind about the reward. Baron Bluster goes ahead with
the meeting, gets the information and claims the reward.

2. Ahmed says to Jane, “Would you like to buy my computer for £300?” Jane agrees to buy
it. Advise Ahmed in each of the following alternative circumstances:

(a) Jane intends to buy the laptop computer that Ahmed was using when he made the
offer. Ahmed intended to sell an old desktop computer that he has at home and no
longer uses.
(b) Ahmed only owns one computer. English is not his first language and he often
confuses the words three and nine when speaking. Jane realises that Ahmed has
probably made a mistake in that he meant to sell his computer for £900.
(c) Ahmed thinks that his mother has bought him a new computer as a birthday
present. In fact she has bought him a new television.
(d) Unknown to Ahmed his only computer was destroyed in a gas explosion at his home
which took place an hour before his conversation with Jane.
(e) Both Ahmed and Jane think that Ahmed’s only computer has the latest Pentium 10
processor. In fact it has a much less powerful Pentium 6 processor.

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 CONTRACT LAW 2016

3. Critically evaluate TWO of the following statements:

(a) It is very difficult to rebut the presumption that an agreement concluded between
family members or friends was not, and that one concluded in a commercial setting
was, intended to have legal effect.
(b) Silence can never amount to acceptance.
(c) The definition of ‘necessaries’ in the context of minor’s contracts is unclear and
antiquated.
(d) The rules concerning so called ‘anticipatory’ breaches of contract are difficult to
state and even harder to defend.

4. ‘The distinction between conditions and warranties should be abandoned and all contract
terms should in the future be regarded as innominate terms.’

Critically discuss this statement.

5. Lady Godiva is short of money and so decides to sell a painting, her Rolls-Royce car and a
gun. Three potential purchasers visit her on 1 February, Charles, Sabena and Toby. Charles,
a well-known collector of modern art, arrives to view the painting of a fish. Lady Godiva
says it is one of a series of paintings of ‘Topes’ (a type of fish) by Ham, a famous painter.
Charles tells Lady Godiva he will think about it and leaves.

Sabena arrives to view the Rolls-Royce car. Lady Godiva tells her that it was the car the
Queen rode in at her Silver Jubilee celebrations (which Lady Godiva believes to be true)
and that there are pictures of the event in the car’s ‘glovebox’. Sabena tells Lady Godiva
that she remembers the event well as she watched it on TV. Sabena does not inspect
the pictures but immediately resolves to buy the car. However, she pretends not to be
interested in the hope that Lady Godiva will reduce the price. “I may be interested, I’ll be
in touch”, says Sabena.

Toby comes to look at the gun which Lady Godiva says ‘is in perfect condition’ and ‘so
accurate it will make anyone look like an expert shot’. Toby has embarrassed himself many
times when shooting and so is very interested despite noticing a crude repair to the barrel
of the gun. He says he will get in touch.

On 1 April Lady Godiva receives phone calls from her three visitors. Sabena offers to buy
the car for £250,000, Charles, the painting for £500,000, and Toby, the gun for £50,000.
Lady Godiva accepts these offers and the goods are all collected the next day.

A year later the following events occur:

(a) Charles is visited by Ham who laughs when he sees the painting and says it is a
fake. Lady Godiva was in fact aware that it was a copy. Charles is especially annoyed
because he had been offered another picture at the same time for the same price
which he turned down to buy the fake ‘Tope’. The other painting which Ham
confirms was genuine recently sold for £2 million.
(b) Sabena, who had completely forgotten about the pictures in the glovebox, discovers
them. They clearly show the Queen in a different car. Sabena has been using the car
to hire out for wedding parties and so had resprayed the car in pink and gold.

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(c) While Toby is shooting, the gun explodes but he is not injured.
Advise Charles, Sabena and Toby why any statements made to them might be classed
as ‘mere representations’ rather than terms, and if so classified, what remedies for
misrepresentation may be available to them.

6. ‘The old common law “exceptions” to the doctrine of privity of contract are irrelevant now
that we have the Contracts (Rights of Third Parties) Act 1999.’

Critically evaluate this statement.

7. The Strolling Bones are an ageing rock band who now enjoy the better things in life. They
contract with Excess University Student Law Society to appear at their annual dinner for
a fee of £200,000 and 20 cases of Chateau Latour wine. It is agreed that the fee shall be
payable and the wine deliverable in two stages: half on signing and half on the day of the
performance. The Student Law Society make the first payment but do not deliver any wine
to the band. The Strolling Bones pay a non- refundable deposit of £5,000 when they book
two large lorries to transport their equipment. The Student Law Society spend a large sum
of money on publicity. The venue at which the annual dinner is to take place fails its safety
inspection the day before the performance and the dinner is cancelled.

Advise the Strolling Bones as to their rights and liabilities.

8. In January 2015, Professor Dim signed a contract with Cambridge Academic Press (CAP)
to write a book on contract law in their prestigious Masterclass series. Dim was to be paid
£20,000 and CAP had an option to employ Dim to write a companion book on property
law for a £25,000 fee. Over the next year Dim spent £5,000 on books and travel to libraries
while working on his new book. In January 2016 in breach of contract CAP terminate the
contract with Dim because CAP had recently contracted with Professor Genius to write a
contract law book in the Masterclass series. CAP invited Dim to publish his contract book
for a fee of £100 in a new series aimed at school students. The Head of the School of Law
had promised Dim that he would receive a special payment of £10,000 if his book was
published in the Masterclass series. Dim writes to CAP telling them he feels humiliated
by the way he has been treated and pointing to a clause in their contract which he had
inserted before the parties signed and which CAP overlooked:

If the contract is terminated by the publishers in breach of contract, they shall pay to the
author a penalty of £10,000.

Advise Dim as to what remedies he is entitled to in respect of CAP’s breach of contract.

132 www.bac.edu.my