Deck 14: Terms of the Contract

Question 1

What was the reason for the decision in the case of De Lassalle v Guildford [1901] 2 KB 215?

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

Answer 1

D

Question 2

In the case of a written contract, the courts assume that the intention of the parties is contained within the 'four corners' of the contract.

Answer 2

True

Question 3

In the case of an oral contract, the intention of the parties cannot be proved.

Answer 3

False

Question 4

If a collateral contract is inconsistent with an exclusion clause in the main contract, the collateral contract will prevail.

Question 5

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

Question 6

Which of the following statements is the best description of an 'innominate term'?

A) A term in a contract, non-performance of which may result in rescission of the contract and/or damages to the plaintiff.
B) A term in a contract not essential to the main purpose of the contract, non-performance of which will not entitle the plaintiff to rescind the contract.
C) 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.
D) A term in a contract which provides that the contract will terminate on the happening of a particular event.

Question 7

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

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 8

If one of the parties had a specific skill or knowledge with regard to the subject matter of the contract, then a statement is probably a term.

Question 9

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

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 10

What was the reason for the decision in the case of Hoyts Pty Ltd v Spencer (1919) 27 CLR 133?

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

Question 11

Which of the following statements is incorrect?

A) The difference between a representation and a term depends on the intention of the parties.
B) The test to distinguish a representation from a term is an objective one.
C) A representation that induces a party to enter a contract will be a term.
D) A representation that is not a term is not actionable in contract law.

Question 12

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

A) A term in a contract which provides that the contract will terminate on the happening of a particular event.
B) A less important term in a contract, non-performance of which entitles the plaintiff to damages only.
C) A term which must be satisfied before a contract can come into existence.
D) A term in a contract, non-performance of which may result in rescission of the contract and/or damages to the plaintiff.

Question 13

Which of the exceptions to the parol evidence rule is illustrated by the case of Van Den Esschert v Chappell [1960] WAR 114?

A) To prove a trade custom.
B) Where the court is of the opinion that the written document contains only part of the agreement.
C) To clarify ambiguous language used in the contract.
D) To demonstrate that a description is false.

Question 14

Why was the statement found not to be a term in the case of: Oscar Chess v Williams [1957] 1 All ER 325?

A) The statement was a term.
B) The plaintiff buyer had special skills or knowledge in relation to the subject matter.
C) Neither party was in a position to know the truth.
D) The defendant seller had special skills or knowledge in relation to the subject matter.

Question 15

The question of whether a statement is a term or a representation depends on the actual intention of the parties.

Question 16

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

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 17

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.

Question 18

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

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 19

Which of the following is NOT necessary for a pre-contractual statement to be enforceable as a collateral contract?

A) The pre-contractual statement is consistent with the main contract.
B) The plaintiff only entered into the main contract because of the pre-contractual statement.
C) The pre-contractual statement is not a term of the main contract.
D) The pre-contractual statement is in writing.

Question 20

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

Question 21

Why did the court imply a term into the contract in The Moorcock (1889) 14 PD 64?

A) Because the practice was so well known it was understood to be included in every contract.
B) To sever a meaningless term and save the rest of the contract.
C) Because of prior dealings between the parties.
D) To overcome an omission and give effect to the intention of the parties.

Question 22

What is the correct name for a term in an agreement which provides that the agreement does not become a contract until the happening of a certain event?

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

Question 23

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

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 24

If a contract contains uncertain or meaningless terms it can not be enforced.

Question 25

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

A) A term in a contract not essential to the main purpose of the contract, non-performance of which will not entitle the plaintiff to rescind the contract.
B) A term in a contract which provides that the contract will terminate on the happening of a particular event.
C) A term which must be satisfied before a contract can come into existence.
D) A term in a contract, the consequences of breach of which cannot be determined until after the breach has occurred and the seriousness of the effects of the breach can be ascertained.

Question 26

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

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.

Question 27

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

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 28

A term in a contract which relieves a party to the contract of some or all liability under the contract is called:

A) An exclusion clause.
B) An exemption clause.
C) An exception clause.
D) Any of the above.

Question 29

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

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 30

An intermediate or innominate term is neither a condition nor a warranty.

Question 31

Breach of condition allows the injured party to only sue for damages.

Question 32

Why was the dry cleaning company held to be liable in Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805?

A) Because the contract so provided.
B) Because the exemption clause in the contract was illegal.
C) Because exemption clauses are not enforceable.
D) Because the purpose of the exemption clause in the contract was misrepresented by the shop assistant.

Question 33

Which of the following is NOT one of the conditions which must be satisfied before a court will imply a term into a contract?

A) The term must be necessary to give business efficacy to the contract.
B) The term must be capable of clear expression.
C) The term must be reasonable and equitable.
D) The term must contradict an express term of the contract.

Question 34

Terms may be read into or implied from previous dealings between the parties.

Question 35

Which of the following is NOT an example of a condition precedent?

A) A contract for the sale of a block of land which is subject to the purchaser obtaining development consent from the local council.
B) A contract for the sale of a house which is subject to a right to terminate if the vendors are unable to purchase another property by the settlement date.
C) A contract for the sale of a house which is subject to the vendors completing the purchase of another property.
D) A contract for the sale of land which is subject to the vendor obtaining development consent from the local council.

Question 36

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

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 37

The consumer guarantees under the Australian Consumer Law exist to ensure that business honour their express warranties.

Question 38

Why was the plaintiff successful in the case of Bettini v Gye [1876] 1 QBD 183?

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.

Question 39

Explain and distinguish between a condition and a warranty.

Question 40

Why was the plaintiff unsuccessful in the case of Poussard v Spiers & Bond [1876] 1 QBD 410?

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.

Question 41

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

Question 42

Which of the following is NOT an approach to interpretation of an exclusion clause?

A) An exclusion clause will be strictly construed against the party relying on it.
B) An exclusion clause will not apply if it produces harsh consequences.
C) An exclusion clause will not apply to actions outside the contract.
D) An exclusion clause will be interpreted by construction of the contract as a whole.

Question 43

Why was the council held to be liable in The Council of the City of Sydney v West (1965) 114 CLR 481?

A) There was an exclusion clause in the contract.
B) The car was extremely valuable.
C) Of the fundamental breach of the contract.
D) The breach was outside the terms of the contract.

Question 44

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

Question 45

Courts traditionally interpreted exclusion clauses contra proferentem, 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?

Question 46

If a document containing an exclusion clause is not signed, the clause will not apply.