Question 1

Why was the plaintiff successful in the case of Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26?

Accepted Answer

A) The term was an innominate term,and the breach was not serious enough to entitle the other party to repudiate. 
B) The term which had been breached was a warranty because it was subsidiary to the main purpose of the contract. 
C) The term which had been breached was a condition because the breach had a serious effect on the contract. 
D) The term which had been breached was a condition because the term was essential to the contract and the other party would not have entered into the contract without it. 
A) The term was an innominate term,and the breach was not serious enough to entitle the other party to repudiate. 
B) The term which had been breached was a warranty because it was subsidiary to the main purpose of the contract. 
C) The term which had been breached was a condition because the breach had a serious effect on the contract. 
D) The term which had been breached was a condition because the term was essential to the contract and the other party would not have entered into the contract without it. A

Question 2

Define a condition and a warranty,and identify their differences.

Accepted Answer

The distinction of terms 'warranty' and 'condition' is important when establishing whether a statement is a term of the contract,because of the remedy available to the injured party,depending on whether a condition or warranty was breached.Thus,if it is established that a statement is a term,it must then be whether it is a:
Condition: A vital term which goes to the root of the contract and allows the injured party the option of rescission and/or damages (Poussard v Spiers & Bond (1876));or a
Warranty: A term of lesser importance that allows the injured party only to recover damages (Bettini v Gye (1876)).
Essentially,a condition is a vital term which goes to the root or heart of the contract and which,if broken,entitles the injured party to (generally)rescind the contract and/or seek damages.A warranty is subsidiary to the main purpose of a contract and is not really the substance of the contract.It is more a promise of a minor nature or collateral to the main purpose of the contract and only entitled the injured party to claim for damages.

Question 3

Explain how the courts decide between a mere representation and a term.

Accepted Answer

The courts have mechanisms in place to determine whether a statement is merely a representation,which induces the offeree to enter into the contract,or a term,which forms part of the contract and indicates how it should be performed.While it is never easy to determine whether a statement is a representation or a term,the courts apply an objective test and will take into account the following:
•the time lapse between the making of the statement and the final agreement;
•whether the person making the statement asks the other person to check or verify it;
•whether the statement was made with the intention of preventing the other party from finding any defects (Hopkins v Tanqueray [1854]);
•the importance attached to the statement by the parties;
•whether the person who has made the representation has some special skill or knowledge not possessed by the other party (Oscar Chess v Williams [1957]).

Question 4

What is the court's rationale for distinguishing between 'representations' and 'terms'? Do you agree with this rationale?

Accepted Answer

The court's rationale for distinguishing

Question 5

In order for a party to rely on an exclusion clause in a contract,what must they show?

Accepted Answer

In order for a party to rely on an exclu

Question 6

What was the reason for the decision in the case of J J Savage and Sons Pty Ltd v Blakney (1970)44 ALJR 123?

Accepted Answer

A) The oral statement was inconsistent with the terms of the written document. 
B) The oral statement was promissory and therefore enforceable as a collateral contract. 
C) The oral statement was representational rather than promissory. 
D) The oral statement was intended to form part of the agreement between the parties. 
A) The oral statement was inconsistent with the terms of the written document. 
B) The oral statement was promissory and therefore enforceable as a collateral contract. 
C) The oral statement was representational rather than promissory. 
D) The oral statement was intended to form part of the agreement between the parties.

Question 7

Which of the following is NOT a reason a court will imply a term into a contract?

Accepted Answer

A) That the term follows a well-known trade custom in a particular industry. 
B) That by implying the term it would cure an obvious omission and give the contract business efficacy. 
C) The term is required by statute. 
D) That by implying the term it would make a fairer bargain. 
A) That the term follows a well-known trade custom in a particular industry. 
B) That by implying the term it would cure an obvious omission and give the contract business efficacy. 
C) The term is required by statute. 
D) That by implying the term it would make a fairer bargain.

Question 8

Which of the following is NOT a remedy for breach of the consumer guarantees under the Australian Consumer Law?

Accepted Answer

A) Damages in the case of a major failure that cannot be remedied. 
B) Damages for breach of conditions implied into the contract. 
C) An appropriate remedy for any breach that is not a major failure. 
D) Refund or replacement of goods for any breach that is a major failure. 
A) Damages in the case of a major failure that cannot be remedied. 
B) Damages for breach of conditions implied into the contract. 
C) An appropriate remedy for any breach that is not a major failure. 
D) Refund or replacement of goods for any breach that is a major failure.

Question 9

Where there is an oral contract,it is not possible to determine the intention of the parties.

Accepted Answer

A) True 
 B)False

Question 10

Why was the plaintiff bound by the exclusion clause in the case of: L'Estrange v Graucob Ltd [1934] 2 KB 394?

Accepted Answer

A) Because the clause applied to the damage that occurred. 
B) Because the clause was explained to them. 
C) Because the clause was contained in a written document signed by the plaintiff. 
D) Because of previous dealings between the parties. 
A) Because the clause applied to the damage that occurred. 
B) Because the clause was explained to them. 
C) Because the clause was contained in a written document signed by the plaintiff. 
D) Because of previous dealings between the parties.

Question 11

The Australian Consumer Law creates guarantees that change depending on the type of manufacturer warranty.

Accepted Answer

A) True 
 B)False

Question 12

When is a particular statement more likely to be a term of the contract rather than a mere representation?

Accepted Answer

A) The statement was made with the intention of preventing the other party from finding any defects. 
B) The other party was asked to check or verify the statement. 
C) Both parties placed considerable importance on the statement. 
D) A long time has passed between the making of the statement and the final agreement. 
A) The statement was made with the intention of preventing the other party from finding any defects. 
B) The other party was asked to check or verify the statement. 
C) Both parties placed considerable importance on the statement. 
D) A long time has passed between the making of the statement and the final agreement.

Question 13

In which of the following cases did the court decide that the term which had been breached was a condition and not a warranty?

Accepted Answer

A) Poussard v Spiers & Bond [1876] 1 QBD 410. 
B) Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 
C) Bettini v Gye [1876] 1 QBD 183. 
D) Associated Newspapers Ltd v Bancks (1951)83 CLR 322. 
A) Poussard v Spiers & Bond [1876] 1 QBD 410. 
B) Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 
C) Bettini v Gye [1876] 1 QBD 183. 
D) Associated Newspapers Ltd v Bancks (1951)83 CLR 322.

Question 14

In order to establish that a collateral contract exists,it is necessary to show that the person making the statement intended it to be acted upon and that the person,to whom the statement was made,relied upon the statement.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is the best description of the 'Parol evidence rule'?

Accepted Answer

A) A court will take into account evidence of the actions and words of the parties in order to ascertain the details of a written agreement. 
B) A court will not admit evidence of the actions and words of the parties that add to,vary or contradict a written agreement. 
C) A court will take into account evidence of the actions and words of the parties in order to ascertain the details of an oral agreement. 
D) A court will not admit evidence of the actions and words of the parties that add to,vary or contradict an oral agreement. 
A) A court will take into account evidence of the actions and words of the parties in order to ascertain the details of a written agreement. 
B) A court will not admit evidence of the actions and words of the parties that add to,vary or contradict a written agreement. 
C) A court will take into account evidence of the actions and words of the parties in order to ascertain the details of an oral agreement. 
D) A court will not admit evidence of the actions and words of the parties that add to,vary or contradict an oral agreement.

Question 16

The requirement of a certain event before a contract can come into existence is known as:

Accepted Answer

A) a condition subsequent. 
B) a condition consequent. 
C) a condition precedent. 
D) a condition antecedent. 
A) a condition subsequent. 
B) a condition consequent. 
C) a condition precedent. 
D) a condition antecedent.

Question 17

When there is a breach of a condition,the only available remedy is to sue for damages.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is the best description of a 'condition'?

Accepted Answer

A) A term in a contract which cannot be classified until after the breach has occurred and the seriousness of the effects of the breach can be ascertained. 
B) An essential term in a contract,non-performance of which may result in rescission and/or damages to the plaintiff. 
C) A term which must be satisfied before a contract can come into existence. 
D) A term in a contract which provides that the contract will terminate on the happening of a particular event. 
A) A term in a contract which cannot be classified until after the breach has occurred and the seriousness of the effects of the breach can be ascertained. 
B) An essential term in a contract,non-performance of which may result in rescission and/or damages to the plaintiff. 
C) A term which must be satisfied before a contract can come into existence. 
D) A term in a contract which provides that the contract will terminate on the happening of a particular event.

Question 19

Courts traditionally interpreted exclusion clauses contra proferentum,or against the interests of the person seeking to rely on it.Why did the courts take this approach,and to what extent has it been displaced by alternative approaches?

Accepted Answer

The courts traditionally interpreted exc

Question 20

In relation to exclusion clauses there is a presumption of equality of bargaining power in commercial contracts.

Accepted Answer

A) True 
 B)False

Exam 13: Terms of the Contract

Why was the plaintiff successful in the case of Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26?

Define a condition and a warranty,and identify their differences.

Explain how the courts decide between a mere representation and a term.

What is the court's rationale for distinguishing between 'representations' and 'terms'? Do you agree with this rationale?

In order for a party to rely on an exclusion clause in a contract,what must they show?

What was the reason for the decision in the case of J J Savage and Sons Pty Ltd v Blakney (1970)44 ALJR 123?

Which of the following is NOT a reason a court will imply a term into a contract?

Which of the following is NOT a remedy for breach of the consumer guarantees under the Australian Consumer Law?

Where there is an oral contract,it is not possible to determine the intention of the parties.

Why was the plaintiff bound by the exclusion clause in the case of: L'Estrange v Graucob Ltd [1934] 2 KB 394?

The Australian Consumer Law creates guarantees that change depending on the type of manufacturer warranty.

When is a particular statement more likely to be a term of the contract rather than a mere representation?

In which of the following cases did the court decide that the term which had been breached was a condition and not a warranty?

In order to establish that a collateral contract exists,it is necessary to show that the person making the statement intended it to be acted upon and that the person,to whom the statement was made,relied upon the statement.

Which of the following statements is the best description of the 'Parol evidence rule'?

The requirement of a certain event before a contract can come into existence is known as:

When there is a breach of a condition,the only available remedy is to sue for damages.

Which of the following statements is the best description of a 'condition'?

Courts traditionally interpreted exclusion clauses contra proferentum,or against the interests of the person seeking to rely on it.Why did the courts take this approach,and to what extent has it been displaced by alternative approaches?

In relation to exclusion clauses there is a presumption of equality of bargaining power in commercial contracts.

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