Deck 8: Contract Law: Terms of the Contract

Question 1

A cooling off period is:

A)a period in which a person can change their mind about proceeding with a contract.
B)the period during which an offeror agrees to leave their offer open.
C)a period during which a contracting party is allowed the use and enjoyment of goods although payment for the goods has not yet been effected.
D)an opportunity for contracting parties to calm down after having been involved in a heated argument.

Answer 1

A

Question 2

Hari sees an advertisement in the newspaper for the sale of home-distilled vodka at the local distillery.He makes a trip down to the distillery.Hari is cautious and asks to sample some of the vodka.After having a sip of the vodka, he is satisfied with the quality, and decides to purchase a barrel of the vodka.When he returns home, he discovers that the vodka in the barrel is of a much poorer quality than the vodka he tasted at the distillery.Hari:

A)can take action against the distillery for breach of the statutory implied term that goods will correspond with a sample of the goods in quality.
B)can take action against the distillery for breach of the statutory implied term that the goods will match their description.
C)has no legal redress as the statutory implied terms only apply to contracts between two corporations.
D)cannot object.There is no requirement of consistent quality.

Answer 2

A

Question 3

An 'implied term' is:

A)a statement of fact.
B)a term of a contract explicitly agreed upon by the parties.
C)a term included in a contract as a result of the operation of a certain legal rule although not necessarily discussed by the parties.
D)a collateral contract.

Answer 3

C

Question 4

David orders a laptop computer with a 17" screen from City Computers Pty Ltd's website.When he receives the laptop computer, he realises that it only has a 13" screen.City Computers Pty Ltd:

A)has breached the statutory implied term requiring that goods be fit for their purpose.
B)has breached the statutory implied term requiring that goods correspond with their description.
C)has breached the statutory implied term requiring that the seller have good title to goods sold.
D)has not breached any statutory duty provided that the computer is in good working order and a fair price was paid for it.

Question 5

A term becomes an express term of a contract when:

A)included in a signed, written contract or brought to the attention of the other party by reasonable notice.
B)it is a significant or important term.
C)it is necessary for the proper performance of the contract.
D)it was not specifically agreed upon but was implied by statute or the operation of a legal rule.

Question 6

Cavinder enjoys off-road driving and purchases a new jeep for that purpose.After returning home, he discovers that the jeep is unsuitable for off-road driving.In which of the following circumstances will Cavinder be unable to rely on the implied statutory term requiring goods to be fit for their purpose?

A)There was no written promise that the jeep would be suitable for off-road driving.
B)The auto dealer had only started selling four-wheel drive vehicles in the past year.
C)Cavinder is a professional off-roader who has been writing articles reviewing four-wheel drive vehicles for many years.
D)Cavinder knew nothing about four-wheel drive vehicles and relied on the expertise of the dealer.

Question 7

Indranee purchases a plasma flat-screen television at a sale.She is given an 80% discount off the original selling price and is informed that the television was a display set and had been on display for more than a year.When she returns home, she discovers that the television does not work.Which of the following statements is correct?

A)The television is not of merchantable quality because of the discount.
B)The television is not of merchantable quality despite the discount.
C)The television is not required to be of merchantable quality because of the discount.
D)The television is not required to be of merchantable quality because the sale of goods legislation does not apply to the transaction.

Question 8

Which of the following statements concerning a disclaimer is not true?

A)A disclaimer is an exemption clause.
B)A disclaimer is an exclusion clause.
C)A disclaimer is a statement that one of the parties to the contract will not be liable for the consequences of a failure to perform their obligations.
D)In Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 the court held a disclaimer to be effective where it was stated in small print at the bottom of a car park entry ticket issued by an automatic machine.

Question 9

Which of the following is not a term implied into contracts by the operation of s 17 of the Sale of goods Act 1923 (NSW)?

A)That the seller has a right to sell the goods.
B)That the buyer will enjoy quiet possession of the goods.
C)That the price for the goods will be in accordance with current market value.
D)That the goods will be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time the contract is made.

Question 10

Which of the following is not a scenario amounting to a contract for the sale of goods?

A)Purchasing a sandwich you have constructed yourself from the Make Your Own Sandwich shop.
B)Having your hair washed, blow-dried and straightened by a hairdresser.
C)Purchasing an air-conditioning system, including commissioning and installation of that system.
D)Buying a motor vehicle privately.

Question 11

Which of the following is not one of the requirements needed to be satisfied in order for a particular term to be implied into a contract?

A)The term is necessary to make the contract viable.
B)If the term is not implied into the contract one of the parties will suffer loss or damage.
C)The term is able to be clearly expressed.
D)The term is consistent with the expressed terms.

Question 12

A statutory term requiring goods to be of 'merchantable quality' means:

A)the actual goods sold must correspond with the description of the goods given at or before the time of the contract in advertising, packaging or signage.
B)the goods sold must be of a quality one would reasonable expect taking into account relevant circumstances, including the price paid for the goods.
C)the goods must be appropriate for use in accordance with their intended purpose.
D)the seller has the right to sell the goods to the buyer.

Question 13

According to the officious bystander test, a court will imply a term into a contract where:

A)a witness is available to give evidence as to the agreement between the parties.
B)an independent party comes forward to confirm the plaintiff's allegations.
C)an innocent bystander agrees that the term was intended to be part of the contract.
D)if a bystander had been present during the negotiations and had inquired of the parties whether the term was a term of the contract the parties would have replied in the affirmative.

Question 14

An 'encumbrance' is:

A)a charge on property to secure repayment of a loan.
B)a right to dispose of possession of property belonging to another.
C)a defect in description of the property.
D)a right to possession of goods.

Question 15

Which of the following are 'goods' for the purposes of the sale of goods legislation?

A)Land and things attached to land such as buildings and fixtures.
B)Intangible items of personal property such as intellectual property rights, shares and debts.
C)Tangible items of personal property.
D)Services involving the exercise of skill and expertise on the part of the service provider.

Question 16

A statutory term requiring goods to be 'fit for their purpose' means:

A)the actual goods sold must correspond with the description of the goods given at or before the time of the contract in advertising, packaging or signage.
B)the goods sold must be of a quality one would reasonable expect taking into account relevant circumstances, including the price paid for the goods.
C)the goods must be appropriate for use in accordance with their intended purpose.
D)the seller has the right to sell the goods to the buyer.

Question 17

Allen, a lawyer, holds a garage sale at his home to sell some of his old things.Esther purchases a coat at the sale, and uses it during her business trip to Canada that winter.The coat fails to keep her warm.When she gets back to Australia, she angrily returns the coat to Allen and demands a full refund, claiming that Allen is in breach of contract.Is Allen in breach of contract?

A)Yes, he is in breach of the statutory implied term regarding fitness for purpose.
B)No, he is not in breach of contract, because there is no contract.
C)Yes, he is in breach of the statutory implied term regarding merchantable quality.
D)No, he is not in breach of contract, because the statutory implied terms regarding fitness for purpose and merchantable quality are only implied if the seller ordinarily deals in those types of goods.

Question 18

A 'statutory term' is most accurately described as:

A)a statement of fact.
B)a term of a contract explicitly agreed upon by the parties.
C)a term included in a contract as a result of the operation of a certain legal rule although not necessarily discussed by the parties.
D)a term incorporated into the contract by the operation of legislation.

Question 19

Which terms are implied by the sale of goods legislation into contracts for the sale of goods?

A)Title, description, quantity and credit.
B)Damages, description, fitness and quantity.
C)Credit, sample, quality and damages.
D)Title, description, quality and fitness.

Question 20

A 'lien' is most accurately defined as:

A)a charge on property to secure repayment of a loan.
B)a right to retain possession of property belonging to another.
C)a defect in title to property.
D)a right to possession of goods.

Question 21

Which of the following is not a requirement that must be satisfied for a court to find breach on the part of a seller of the statutory implied term regarding fitness for purpose?

A)The seller normally sells goods of that description.
B)The buyer relied on the seller's skill and judgement.
C)The goods are not fit for the stated purpose.
D)The buyer requested the particular goods by their patent or trade name.

Question 22

Which of the following is one of the terms implied into contracts for the sale of goods by operation of the sale of goods legislation?

A)When goods are delivered that have not been previously examined by the buyer the buyer must accept the goods even though they have not had a reasonable opportunity to examine them.
B)If the goods contain a hidden defect that only becomes apparent after some time or use and the defect was present at the time of delivery, the seller will not be in breach of the contract and the buyer will not be entitled to terminate the contract or obtain a refund.
C)The buyer will not be deemed to have accepted goods even though they have been delivered to the buyer and the buyer performs an act in relation to them inconsistent with the seller's ownership.
D)The buyer will be deemed to have accepted the goods if, after the lapse of a reasonable time, the buyer retains the goods without intimating to the seller that the buyer has rejected them.

Question 23

Which of the following statements is not true concerning the rule nemo dat quod non habet?

A)The phrase means no one gives what one does not have.
B)A purchaser of goods from a seller who does not own the goods cannot acquire ownership of the goods.
C)A purchaser of goods from a seller who does not own the goods cannot pass on ownership of the goods.
D)A seller who is not the owner of goods cannot pass on title to a buyer even where the seller is the authorised agent of the owner of the goods.

Question 24

Which of the following is not a type of misrepresentation that makes a contract voidable by the innocent party?

A)Fraudulent misrepresentation
B)Negligent misrepresentation
C)Culpable misrepresentation
D)Innocent misrepresentation

Question 25

Which of the following is not a circumstance where a court will imply a term into a contract?

A)The term is implied because it is the way things are usually done in a particular region, trade, industry or profession.
B)One of the parties intended the term to be incorporated into the contract but failed to communicate this intention to the other party.
C)The term is implied as a result of the continuing relationship between the parties.
D)The term is a universal implied term implied into all contracts.

Question 26

Tom is a supplier of widgets and John is a retailer of widgets.John wants to purchase widgets from Tom for his business and they both agree verbally to a contract.Which of the following is likely to be an express term of the contract?

A)The price of the widgets which Tom stipulated and John agreed to in the course of negotiations.
B)The requirement that the widgets be of 'merchantable quality'.
C)The requirement that both parties act in good faith.
D)The requirement that the widgets be packaged according to usual industry practice.

Question 27

If a contract is for the sale of specific goods that are not yet ready for delivery to the buyer:

A)ownership passes to the buyer at the time the contract is formed.
B)ownership passes to the buyer when the seller has done whatever needs to be done to put the goods into a deliverable state and the buyer has been notified accordingly.
C)there is no valid contract.
D)ownership is transferred to the buyer when payment has been made for the goods.

Question 28

If a contract is for the sale of specific goods:

A)ownership passes at the time the contract is formed, regardless of when payment or delivery takes place.
B)the buyer does not become the owner until the goods are selected and agreed upon by both parties.
C)ownership passes at the time that payment for the goods takes place.
D)ownership passes at the time delivery of the goods is carried out.

Question 29

A 'collateral contract' is:

A)a secondary contract, the consideration for which is the entry into the main contract.
B)one of a number of contracts entered into by the same parties at the same time.
C)a contract entered into by immediate family members.
D)a contract where the payment for the goods is to be made by way of instalments.

Question 30

If a party to a contract makes an innocent misrepresentation, the other party will be entitled to:

A)recover damages in the tort of negligence.
B)recover damages in the tort of deceit.
C)recover damages for breach of contract.
D)terminate the contract.

Question 31

Where a contract involves the provision of both goods and services it will only be a contract for the sale of goods for the purposes of application of the sale of goods legislation if:

A)the main purpose of the contract is the provision of services and the transfer of ownership of goods is ancillary to that purpose.
B)the main focus of the contract is the transfer of ownership of the goods and the provision of services is ancillary to that purpose.
C)the substance of the contract is the skill and expertise of one of the parties.
D)the contract is specifically expressed to be a contract for the sale of goods.

Question 32

A court will interpret a disclaimer in a contract between a business and a consumer contra proferentem.This means:

A)against the interests of the business seeking to rely upon it.
B)in favour of the interests of the third party seeking to rely upon it.
C)in a way that makes it more likely that the disclaimer will apply to the apparent breach.
D)in a way that ensures that the business is protected in all circumstances.

Question 33

Which of the following statements is not true concerning an implied promise by the seller that goods will be fit for their purpose?

A)At the time the contract was formed the buyer made the intended purpose known to the seller.
B)The buyer relied upon the seller's skill and judgement.
C)Where the goods have several purposes, they must be reasonably fit for all of those purposes.
D)The seller normally deals in goods of this description.

Question 34

Which of the following is not an element that must be established in order to prove negligent misrepresentation?

A)The representor owed a duty of care to the representee.
B)The representor breached their duty of care.
C)The misrepresentation was made without belief in its truth.
D)The breach of duty by the representor caused the loss incurred by the representee.

Question 35

When the parties to a contract for the sale of goods have not agreed upon the terms for delivery of goods, the sale of goods legislation implies certain terms into the contract.Which of the following is not one of those implied terms?

A)The seller bears the expense of putting the goods into a deliverable state.
B)The place for delivery is the seller's place of business.
C)The seller must deliver the exact quantity of goods ordered by the buyer.
D)The buyer is obliged to accept delivery in instalments.

Question 36

Which of the following is not a circumstance where a court will admit verbal evidence when determining the terms of a contract?

A)To establish that a written contract is invalid or unenforceable for some reason.
B)To establish that one party is acting as an agent for someone else.
C)To incorporate common trade usage not referred to in the written contract.
D)To vary the terms of a written contract even where that contract appears to be a complete record of agreement.

Question 37

If a contract is for the sale of unascertained goods:

A)ownership passes at the time the contract is formed, regardless of when payment or delivery takes place.
B)the buyer does not become the owner until the goods are selected and agreed upon by both parties.
C)ownership passes at the time that payment for the goods takes place.
D)ownership passes at the time delivery of the goods is carried out.

Question 38

Which of the following statements is not true concerning a disclaimer?

A)A disclaimer is a statement that one of the parties will not be in breach despite failing to perform one or more of their contractual obligations.
B)A disclaimer will protect a party to the contract from the consequences of their apparent breach of the contract.
C)A disclaimer may also be known as an exclusion clause, exemption clause or limitation of liability clause.
D)A disclaimer will be effective to protect a person from liability for breach of contract regardless of whether or not the disclaimer is a term of the contract.

Question 39

Which of the following is not a method of alternative dispute resolution?

A)Litigation
B)Mediation
C)Arbitration
D)Conciliation

Question 40

Which of the following is not a requirement that must be satisfied in order for a term requiring goods to be fit for their purpose to be implied into a contract for sale of goods?

A)At the time the contract was formed the buyer made the intended purpose known to the seller.
B)The buyer made the intended purpose known to the seller even where the goods only had one purpose.
C)The buyer relied upon the seller's skill and judgement.
D)The seller normally deals in goods of this description.

Question 41

Which of the following disclaimers is least likely to form part of the contract?

A)A disclaimer set out in a written contract that has been signed by the customer.
B)A disclaimer brought to the attention of the customer as soon as the customer complains about the service provided.
C)A disclaimer implied into the contract as a result of prior dealings between the parties.
D)A disclaimer brought to the attention of the customer before the contract was formed.

Question 42

The sale of goods legislation implies into contracts for the sale of goods a number of important terms relating to delivery (in the absence of agreement to the contrary).Which of the following is not one those terms?

A)The buyer must pay to put the goods into a deliverable state.
B)The place for delivery is the seller's place of business, if the seller has one, or the seller's residence.
C)The seller must deliver the exact quantity of goods ordered by the buyer.
D)The buyer is not required to accept delivery in instalments.

Question 43

Jack and Neo have a longstanding commercial relationship whereby every few months Neo orders widgets from Jack.Which of the following is most likely to be an implied term in the contract?

A)The place of delivery will be the same place as last time.
B)The price of the widgets will be 10% higher than last time.
C)The price paid for the Widgets will be refunded if Neo changes his mind.
D)The price will be 'a fair price'.

Question 44

Janet is a hairstylist who runs her own hair salon in Brisbane.Jesse is a first-time patron of Janet's salon.After her haircut, Jesse's hair does not look the way she expected it to look.Jesse wants to sue Janet for breach of contract.Janet however denies liability by claiming that there is an express term disclaiming all liability not resulting from negligence.In which of the following circumstances will Janet not be able to rely on the disclaimer?

A)The disclaimer is printed in large lettering above the counter where Jesse stands when making an appointment and before payment is made.
B)The disclaimer is written on a big placard and placed outside the salon every morning.
C)The disclaimer is printed on the receipt that Janet gives each customer after they have made payment.
D)At the time each customer calls to make an appointment, Janet explains her policy of not accepting liability for any bad haircut unless it was done negligently.

Question 45

Cyril is a lawyer who wants to buy an apartment in the city.When he goes to view the apartment it is bare.The developer promises him that the apartment will be fully furnished when he purchases it.However the developer knows that furniture is not included in the purchase price.Cyril purchases the apartment.The developer has made a:

A)fraudulent misrepresentation.
B)negligent misrepresentation.
C)innocent misrepresentation.
D)reckless misrepresentation.

Question 46

There is no statutory implied promise by the seller that the goods supplied will be fit for their purpose if:

A)the buyer expressly or by implication made the intended purpose known to the seller.
B)the buyer relied upon the seller's skill and judgement.
C)the seller normally deals in goods of that description.
D)the buyer purchased the goods at a garage sale.

Question 47

Jack negotiates with Jill to buy her red Ferrari.Which of the following will most likely be unenforceable as a non-contractual representation?

A)During negotiations, Jill states that red Ferraris go faster.
B)Jill states that the price of the Ferrari will be $1 million.
C)Jack tells Jill that he has to take delivery by the end of the week.
D)Jill tells Jack that she purchased the car brand new.

Question 48

Despite the parol evidence rule, a court will allow evidence of oral statements relating to a written contract in certain circumstances.Which of the following is not one of those circumstances?

A)To establish that a written contract is invalid or unenforceable for some reason.
B)To establish that one party is an agent for someone else.
C)To explain an ambiguity in the contract.
D)To show that a written term was not intended to be part of the contract.

Question 49

Which of the following is not a circumstance where a written contract will be void and unenforceable according to the legal rule of non est factum?

A)The person did not read the contract because they are blind.
B)The person did not read the contract because they are illiterate.
C)The person did not read the contract because they cannot read English.
D)The person did not read the contract because they were in a hurry.

Question 50

Which of the following is not a type of misrepresentation?

A)Fraudulent misrepresentation
B)Innocent misrepresentation
C)Reckless misrepresentation
D)Negligent misrepresentation

Question 51

Larry visits Zhivago's restaurant.Larry tells Zhivago that he is vegetarian, and Zhivago recommends the lasagne.Zhivago has forgotten that there is chicken in the lasagne.Larry orders the meal.Zhivago has made a:

A)fraudulent misrepresentation.
B)innocent misrepresentation.
C)negligent misrepresentation.
D)reckless misrepresentation.

Question 52

Which of the following is not a requirement that must be satisfied before a court will imply a (non-statutory) term into a contract?

A)The term is reasonable and fair.
B)The term is necessary to make the contract viable.
C)The term is so obvious it goes without saying.
D)The term is in writing.

Question 53

Esther agrees to lease an apartment from John.Before the signing of the contract, Esther asks John if the toilets in the apartment are all working properly because she is very particular about her toilets.John assures her that they are all working properly.There is no reference to the toilets in the written contract.After moving into the apartment, Esther finds that none of the toilets work properly.Which of the following is most likely to be a consequence?

A)John is in breach of a collateral contract and Esther is entitled to damages.
B)John has breached a condition of the lease and Esther is entitled to terminate the contract.
C)John has committed the tort of negligence and Esther is entitled to damages.
D)Esther is not entitled to any remedy: the lease was a written and signed contract and the parol evidence rule prevents John's verbal assurance from being included as a term of the lease.

Question 54

Mel owns Brazilion Beauty, a beauty salon in Queensland.She accepts Debbie as an apprentice stylist.Included in Debbie's contract is a clause that states that in the event of termination of her employment, Debbie will not be able to be employed by any other beauty salon in Queensland or begin her own beauty salon in Queensland for a period of 20 years.After five years with Brazilion Beauty, Debbie leaves the salon.Which of the following is the most likely outcome?

A)Debbie will not be able to work for any beauty salon in Queensland for the next 20 years.
B)Debbie will not be able to start her own beauty salon in Queensland for the next 20 years.
C)Debbie will not be able to work for any beauty salon or start her own beauty salon in Queensland for the next 20 years.
D)A court would not enforce the restraint of trade clause because it is too unreasonable.

Question 55

X wants to buy potatoes in bulk from Y and goes to Y's warehouse to inspect the potatoes.At the warehouse, X likes the look of the potatoes and agrees to buy 500 bags of potatoes at $1 per kilogram.In the absence of agreement to the contrary, when will ownership of the potatoes be transferred to X?

A)When the contract is formed.
B)When the potatoes are delivered to X.
C)When Y weighs the bags of potatoes and informs X of the total price.
D)When X pays for the potatoes.