Deck 15: Rights and Liabilities of the Parties, Discharge and Remedies

Question 1

Which of the following involves the discharge of a contract by frustration?

A) One of the parties becomes bankrupt.
B) Each party discharges the obligation of the other to perform the contract.
C) One of the parties fails to carry out their obligation completely, and the other party accepts this.
D) Performance of the contract becomes impossible due to the occurrence of an unforeseen event.

Answer 1

D

Question 2

An assignment of a debt at common law requires:

A) Clear evidence of intention plus consideration from the assignee to the assignor.
B) A debt cannot be assigned at common law.
C) Notice to the debtor plus consideration from the assignee to the assignor.
D) An assignment in writing signed by the assignor.

Answer 2

B

Question 3

A contract for personal services can not be assigned.

Answer 3

True

Question 4

Which of the following involves the discharge of a contract by performance?

A) One of the parties becomes bankrupt.
B) Each party discharges the obligation of the other to perform the contract.
C) The parties carry out exactly the terms of the contract.
D) Performance of the contract becomes impossible due to the occurrence of an unforeseen event.

Question 5

Which of the following is the best description of discharge by accord and satisfaction?

A) One party leads the other to reasonably believe that strict performance will not be insisted upon.
B) A new agreement is substituted for the old by the parties.
C) Both parties abandon their original agreement while it is still executory.
D) A party who has already performed their obligation agrees to relieve the other party from performing their obligation in return for their doing something different.

Question 6

Which of the following is the meaning of the Latin term 'quantum meruit'?

A) As much as the person has earned or as much as they deserve.
B) The interpretation of an argument or document in the manner least favourable to the party who put it forward.
C) Restoration to the original position.
D) Let the buyer beware.

Question 7

Which of the following involves the discharge of a contract by agreement?

A) One of the parties becomes bankrupt.
B) Each party discharges the obligation of the other to perform the contract.
C) One of the parties fails to carry out their obligation completely, and the other party accepts this.
D) Performance of the contract becomes impossible due to the occurrence of an unforeseen event.

Question 8

The absence of privity of contract will not prevent a claim under the Australian Consumer Law.

Question 9

Which of the following is the best description of discharge by waiver?

A) One party leads the other to reasonably believe that strict performance will not be insisted upon.
B) A new agreement is substituted for the old by the parties.
C) Both parties abandon their original agreement while it is still executory.
D) A party who has already performed their obligation agrees to relieve the other party from performing their obligation in return for their doing something different.

Question 10

Which of the following is the best description of mutual discharge?

A) One party leads the other to reasonably believe that strict performance will not be insisted upon.
B) A new agreement is substituted for the old by the parties.
C) Both parties abandon their original agreement while it is still executory.
D) A party who has already performed their obligation agrees to relieve the other party from performing their obligation in return for their doing something different.

Question 11

Which of the following is the best description of 'privity of contract'?

A) A third party is entitled to bring an action to enforce a contract to which they are not a party if they have the consent of one of the parties to do so.
B) The parties to the contract are under an obligation not to disclose the details of the contract to third parties.
C) Only the persons who are parties to the contract can acquire rights and incur liabilities under it.
D) The parties to the contract are only obliged to comply with the terms of the agreement and are not obliged to do any more than this.

Question 12

Only a party to an insurance policy can obtain an indemnity under it.

Question 13

Which of the following is the best description of discharge by release?

A) A party who has already performed their obligation chooses to relieve the other party from performing their obligation.
B) Both parties abandon their original agreement while it is still executory.
C) One party leads the other to reasonably believe that strict performance will not be insisted upon.
D) A party who has already performed their obligation agrees to relieve the other party from performing their obligation in return for their doing something different.

Question 14

Which of the following is NOT an exception to the doctrine of privity of contract?

A) Estoppel.
B) Negotiable instruments.
C) A lease.
D) A contract for the sale of land.

Question 15

A novation is a new agreement which replaces a party to a contract with a third party.

Question 16

Which of the following involves the discharge of a contract by operation of law?

A) One of the parties becomes bankrupt.
B) Each party discharges the obligation of the other to perform the contract.
C) One of the parties fails to carry out their obligation completely, and the other party accepts this.
D) Performance of the contract becomes impossible due to the occurrence of an unforeseen event.

Question 17

Which of the following is NOT an example of an assignment of rights by operation of law?

A) Rights against a manufacturer under the Australian Consumer Law.
B) Executor of a deceased estate.
C) Bankruptcy.
D) Assignments under the state property law statutes.

Question 18

Which of the following will NOT result in the discharge of a contract by operation of law?

A) The merger of a simple contract into a formal contract.
B) The death of one of the parties to a contract other than for personal services.
C) The material alteration of a written contract without the consent of the other party.
D) The bankruptcy of one of the parties.

Question 19

Which of the following statements is the best description of discharge by novation?

A) One party leads the other to reasonably believe that strict performance will not be insisted upon.
B) A new agreement is substituted for the old by the parties.
C) Both parties abandon their original agreement while it is still executory.
D) A party who has already performed their obligation agrees to relieve the other party from performing their obligation in return for their doing something different.

Question 20

In which of the following circumstances will partial performance of a contract by one party NOT give rise to a right to payment?

A) Where the contract is entire.
B) Where the other party has prevented them from completing the contract.
C) Where the other party has freely and willingly accepted their partial performance.
D) Where they have substantially, but not completely, performed the contract.

Question 21

A claim for quantum meruit can be made even where the contract is classified as entire.

Question 22

Why did the court find that the contract was frustrated in the case of: Horlock v Beal [1916] AC 486?

A) Due to the fundamental and radical change in the circumstances of the contract.
B) Due to the declaration of war and the consequent impossibility of performing the contract.
C) Due to the complete destruction of the subject matter of the contract.
D) Due to the non-occurrence of an event essential to achieve the substantial purpose of the contract.

Question 23

What factors must be present in order for a contract to be discharged by frustration?

Question 24

Use practical examples to illustrate each of the four circumstances in which incomplete performance of your obligations under a contract legally and fairly gives rise to a right to at least partial payment.

Question 25

If there has been substantial performance of the contract, the doctrine of substantial performance may permit the defaulting party to still obtain the contract price.

Question 26

The purpose of the Frustrated Contracts Acts of NSW and S.A. is to:

A) Imply terms into the contract to govern the circumstances which have occurred.
B) Abolish the doctrine of frustration.
C) Adjust the rights of the parties so that there will be a fairer outcome.
D) Render all contracts enforceable despite the occurrence of a frustrating event.

Question 27

Payment of money due under a contract must be made to the other party at its normal place of business or as directed by the contract.

Question 28

Why did the court find that the contract was frustrated in the case of: Taylor v Caldwell (1863) 122 ER 309?

A) Due to the declaration of war and the consequent impossibility of performing the contract.
B) Due to the non-occurrence of an event essential to achieve the substantial purpose of the contract.
C) Due to the fundamental and radical change in the circumstances of the contract.
D) Due to the complete destruction of the subject matter of the contract.

Question 29

Why did the court find that the contract was frustrated in the case of: Krell v Henry [1903] 2 KB 740?

A) Due to the declaration of war and the consequent impossibility of performing the contract.
B) Due to the complete destruction of the subject matter of the contract.
C) Due to the non-occurrence of an event essential to achieve the substantial purpose of the contract.
D) Due to the fundamental and radical change in the circumstances of the contract.

Question 30

The decision of the court in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 was:

A) That the manufacturer of the machine which was being built to meet the order of the purchaser could not recover the cost of manufacturing the machine because the frustrating event had intervened to terminate the contract.
B) That the purchaser of the machine could recover the deposit which it had paid.
C) That the contract was terminated by frustration.
D) All of the above.

Question 31

Why did the court find that the contract was frustrated in the case of: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337?

A) Due to the declaration of war and the consequent impossibility of performing the contract.
B) Due to the non-occurrence of an event essential to achieve the substantial purpose of the contract.
C) Due to the fundamental and radical change in the circumstances of the contract.
D) Due to the complete destruction of the subject matter of the contract.

Question 32

Describe the quantum meruit rule and when it arises.

Question 33

Which of the following is NOT one of the requirements which must be satisfied before a contract will be frustrated?

A) The frustrating event was outside of the control of the parties.
B) It would be unjust to hold the parties to the original contract.
C) The frustrating event was foreseen and referred to in the contract.
D) The frustrating event has significantly or radically changed the obligations of the parties.

Question 34

Where one party is prevented from performing, the other party may regard the contract as at an end.

Question 35

The decision of the court in Cutter v Powell (1795) 101 ER 573 was that:

A) The contract was divisible and the widow could recover the proportion of the contract amount equal to the number of days that Cutter had completed before he died.
B) The contract was entire and hence the widow could recover nothing.
C) Cutter's death terminated the contract and the contract was therefore void.
D) The widow of the deceased was entitled to payment based on a quantum meruit.

Question 36

In the case of discharge by performance, the parties are discharged from any obligations provided that performance corresponds exactly with the terms of the contract.

Question 37

Explain the meaning of novation and what does it create.

Question 38

A waiver is where one party leads the other to reasonably believe that strict performance will not be insisted upon.

Question 39

The benefit of frustration is available in which of the following cases?

A) Where one of the parties is subject to financial hardship which makes completion of the contract difficult.
B) Where the cost of completing the contract becomes too high.
C) Where it is inconvenient to complete the contract.
D) Where an unforseen event outside the control of the parties significantly changes their obligations and neither party was at fault.

Question 40

What is the effect of a frustrating event upon the obligations of the parties to a contract?

A) The contract becomes voidable by either party, and until one of the parties voids the contract it is valid and enforceable.
B) The contract is void from the frustrating event and any obligations arising before the frustrating event must still be fulfilled.
C) The contract is void ab initio ('from the beginning'), the parties are to be restored to their original positions, and any payments already made refunded to the payer.
D) Each party is still obliged to fulfil their obligations under the contract as if the frustrating event had not occurred.

Question 41

Which of the following is LEAST likely to be classified as a breach of contract?

A) A delay by one party in carrying out their obligations where time is of the essence.
B) A failure by one party to comply with one of the terms of the contract.
C) An announcement by one party that they do not intend to carry out their obligations under the contract.
D) A failure by one party to exercise reasonable care in carrying out their obligations under the contract.

Question 42

When one of the parties fails to perform their obligations under the contract at the time agreed, this is called an:

A) Actual breach.
B) Total breach.
C) Failure to comply.
D) Anticipatory breach.

Question 43

A contract that has been breached is void ab initio.

Question 44

Using case law examples, demonstrate how the doctrine of frustration has evolved over the last 200 years.

Question 45

If one party indicates that they will not be performing their part of the contract prior to the time for performance, the innocent party must wait until the due date before they can sue for breach.