Chapter 1

1. Which two parties are involved in a civil law case?

A
Accused and defendant
B
Prosecution and defendant
C
Claimant and accused
D
Defendant and claimant
2. Which of the following contracts comes under the scope of the UN Convention on Cont
racts for the International Sale of Goods?
A
The purchase of goods for personal use by a private individual in England and a company in
Spain.
B
The sale of commercial goods by auction where the seller is in Germany, the buyer is in
France and the auction is held in England.
C
The sale of an aircraft where the seller is in Europe and the buyer is in America.
D
The sale of farming equipment on credit terms between a seller in Poland and a buyer in
Greece.
3. What is the main remedy available under the civil law? Damages to compensate for loss
or damage suffered is the main remedy under the civil law.
4. The standard of proof in criminal law cases is the balance of probability.
A
True
B
False
5. Under the UNCISG the sole obligation of the seller is to deliver the goods to the buyer at
the place and time they agreed.
A
Yes
B
No
6. Which of the following ICC Incoterms only applies to maritime transport?
A
CIF
B
EXW
C
DDP
D
 CPT
7. In Sharia law the concept of riba prevents the sharing of profit between parties in a
financial transaction.
A
True
B
False
Chapter 2

1. What will be the consequences of the following in relation to a purported contract

between two parties?
There is clear agreement between the parties on all terms and they intend to create a legally
binding agreement but there is no consideration. ➔ Void
One of the parties is aged 17. ➔ Voidable
The contract is an agreement to defraud HMRC. ➔ Void
The contract is made orally and provides for Graham to pay Harry the debt owed to Harry by
Imran. ➔ Unenforceable
2. Bianca sees the following notice in a newspaper: "20 orthopaedic beds, £100 each"
How would you describe this notice in terms of contract law?
A
Offer
B
Invitation to treat
C
Supply of information
D
Advertisement
3. On 1 October, Adam posts a letter to Belinda offering to sell his fridge. On 2 October,
Belinda receives Adam's letter. On 3 October, Adam changes his mind and posts a letter
to Belinda saying that the fridge is no longer for sale. Later that day, Belinda telephones
Adam and accepts his offer.

Which one of the following best describes the state of the contract between Adam and
Belinda for the sale of Adam's fridge?

It is valid because acceptance took place before Belinda received Adam's revocation.

It is invalid because Adam posted his revocation before Belinda accepted.

It is valid because Adam cannot revoke the offer once Belinda has received it.

4. Frankie writes to Xiao-Xiao on 1 July offering to sell him her sailing dinghy for £1,200. On
10 July, having received no reply, she decides to withdraw this offer and sends a second
letter. On 10 July, Xiao-Xiao receives the original letter and posts a reply to Frankie
accepting the offer. Frankie never receives Xiao-Xiao's letter and sells the boat to Mel on
13 July.
Indicate whether or not each of the following statements is true or false.
• Frankie's original letter constitutes an offer, which Xiao-Xiao is entitled to accept or
reject. ➔ True
 • Xiao-Xiao's reply constitutes a valid acceptance. ➔ True
• Frankie is legally entitled to sell the boat to Mel on 13 July since she revoked Xiao-Xiao's
offer. ➔ False
5. In which of the following situations is there no intention to create legal relations?
A
Where one partner in a marriage or civil partnership agrees to pay the other a monthly
amount towards food bills.
B
In divorce situations where one partner agrees to continue to pay the mortgage on the family
house.
C
Where an individual signs an employment contract.
D
Where one business agrees to purchase goods from another business.
6. Ana owns a classic car. Ana and Bev are negotiating a deal for Bev to clean the outside
of Ana's car for her before Saturday, when she is lending her car to Claudia for her
wedding. Ana will pay £10 and allow her to borrow the car on Sunday when Claudia is
finished with it.

On Thursday Ana gets mud in the car and therefore when Bev comes on Thursday to
clean the car, Ana asks her to clean the inside as well.

Bev cleans the car and asks for £15 to cover the fact that she cleaned the inside as well
as the outside. Ana refuses to pay Bev extra. She also discovers that she does not have
£10 to pay her, only £5. She offers her £5 and a week's loan of the car in full settlement.

Indicate whether or not each of the following statements is true or false.

• Ana’s consideration of £10 and a loan of her car is valid consideration for Bev’s promise
to clean her car. ➔ True
• By the time she raises the issue with Ana, the fact that Bev has cleaned the inside of the
car is past consideration and therefore she cannot demand additional payment for it. ➔
True
• Ana has offered Bev additional consideration (extended loan of the car) for his waiver of
the other £5 and therefore, on acceptance by Bev, the waiver will be binding. ➔ True
7. Which two of the following are reasons for a court implying terms into a contract?
A
The term is implicitly required due to the nature of the contract.
B
To make the contract fair on both parties.
C
The term is required to ensure every possible eventuality is covered.
D
To give business efficacy to the contract.
8. You have been asked to act as legal adviser to Catherine, advising her whether or not a
contract exists between her and Luiz after the following course of events.
On Monday, Luiz advertised a table and chairs for sale for £100 in the local newspaper.
Catherine saw the advertisement and telephoned Luiz offering him £75. Luiz offered to
sell the table and chairs to Catherine for £80. She accepted. Two days later, Catherine
rang Luiz and said that she would give him £85 if he delivered the table and chairs as
well. Luiz refused. Catherine said that if she had to collect the table and chairs herself
she would only give Luiz £75. During the course of their negotiations, Catherine and Luiz
have discovered that they know each other through the local gardening club.

Indicate whether each of the following statements is true or false.

• As Catherine and Luiz are acquaintances, they cannot form a binding contract. ➔ False
• Catherine and Luiz have not formed a valid contract as they have been unable to come to
an agreement about price. ➔ False
• Delivery is capable of constituting sufficient consideration for an increase in contract
price. ➔ True
• If Luiz accepts Catherine's final suggestion, there will be a binding contract between
them at a price of £75. ➔ False
9. Which one of the contracts below is a standard form contract?
A
A document put forward for the customer's signature by a supplier of goods in which pre-
printed contractual terms are set out.
B
A document signed by both parties to a contract in which contractual terms as negotiated
between them are set down.
C
An oral agreement to enter into relations on the basis of terms as agreed following
negotiations between the parties.
D
An oral agreement between two parties who have negotiated terms regarding the standards
of performance to be met by each party in the main contract.
10. A valid contract is a legally binding agreement. The three essential elements of a contract are
offer and acceptance, consideration, and intention to create legal relations.
11. Indicate if the following statement is true or false.
• A voidable contract is not a contract at all. ➔ False
• Advertising an auction is an offer to sell. ➔ False
• As a general rule, silence cannot constitute acceptance. ➔ True
• Past consideration, as a general rule, is not sufficient to make a promise binding. ➔ True
• A promise of additional reward for existing duties is not generally binding. ➔ True
• The terms of a written contract can be varied verbally. ➔ True
• In the context of contractual considerations, payment of a lesser sum cannot be
satisfaction for the whole sum unless something is added to it, such as earlier payment,
or payment by a different method. ➔ True
12. Match the definition to its term.
 • The contract is valid but the parties cannot be held to its terms. ➔ Unenforceable
• Neither party is bound. ➔ Void
• The contract is binding unless and until one party chooses to avoid it. ➔ Voidable
13. How is the circulation of a price list categorised in the law of contract?
A
Offer
B
Tender
C
Invitation to treat
D
Auction
14. Fill in the blanks in the statements below, using the words provided.
As a general rule, acceptance must be communicated to the offeror and is not effective
until this has been done.
An offer is a definite promise to be bound on specific terms and must be distinguished from
a supply of information and from an invitation to treat.
A counter-offer counts as a rejection of the original offer.
15. Give three examples of situations likely to be invitations to treat. Advertisement, Exhibition
of goods for sale, Circulation of a price list
16. Define the postal rule: where the use of the post is within the contemplation of both the
parties, the acceptance is complete and effective as soon as a letter is posted, even
though it may be delayed or even lost altogether in the post.
17. Distinguish between executed and executory consideration. Executed consideration is an
act in return for a promise, such as paying for goods when the shopkeeper hands them
over. Executory consideration is a promise given for a promise, such as promising to pay
for goods that the shopkeeper puts on order for you.
18. Consideration need not be adequate but it must be sufficient.
19. What is the name of the EU law, which now forms part of Retained EU Law in the UK, that
deals with the situation where parties that are based in European countries have not agreed
which country's law applies? Rome II
Chapter 3

1. Carol employs Luz as an interior designer and decorator to do some work on her
apartment. The contract price is £15,000. Luz completes the work within the allotted
time. When inspecting the work, Carol notices that a lampshade she specified has not
been supplied, that the door handles are of the wrong design and that two of the new
bathroom tiles are cracked. She tells Luz the job is incomplete and refuses to pay.

Advise Luz.
A
Luz is not entitled to payment since she has not performed her obligations completely and
exactly.
B
Luz is entitled to receive the full contract price since she has substantially performed her part
of the contract.
C
Luz is entitled to receive the contract price less a reasonable deduction for the defects
and omissions.
2. Which of the following is not a correct statement of the law relating to frustration of
contract?
A
Parties are discharged from their contract if altered circumstances render the contract
fundamentally different in nature from what was originally agreed.
B
Parties are discharged if an event, for which neither party is responsible, occurs which
renders performance impossible or futile.
C
Parties who contract that something should be done are discharged if performance
becomes substantially more expensive or onerous.
D
Parties who contract that something should be done are discharged if their assumption that
certain conditions (which are fundamental to the contract), would continue, proves to be
totally false.
3. Elena runs a homemade cake business. Cook & Co contract to sell her a large industrial
oven to enable her to expand her business by enabling her to increase cake production.
Elena tells Cook & Co that she has also been awarded a contract to bake 100 jacket
potatoes daily during November and December for a local street fair in the run up to
Christmas and so needs the oven by 31 October. Cook & Co agrees to deliver the oven by
28 October. Unknown to Cook & Co, Elena has also agreed to allow Ivan the baker to use
the oven on Fridays (her day off) so that he can meet his extra customer demands over
the weekends.

Owing to a dispute between the manufacturer and Cook & Co, the oven is not delivered to
Elena until 12 November. Elena is therefore unable to fulfil the jacket potatoes contract and
 also is unable to increase cake production as planned. She has also lost the hire payment
agreed by Ivan in respect of two Fridays.

Which one of the following statements best describes the legal position of Cook & Co?
A
Cook & Co could not be expected to know that Elena would not have access to a replacement
oven and will not have to pay damages as a consequence.
B
Cook & Co was aware of the jacket potatoes contract and so are liable for that loss but not
for Elena's other losses as they were not known.
C
Cook & Co is liable for all Elena's losses since they were all in the course of her business.
D
Cook & Co is not liable for the loss due to the agreement with Ivan but will be liable in
respect of the other losses.
4. Chana agrees to buy a car from Mel's Motors for £6,000. Mel had paid £5,500 for the car.
On the agreed day, Chana arrives at the dealers but refuses to accept or pay for the car.
In the meantime, the car's market value has risen to £7,000. The following week Mel sells
the car for £7,500. Mel claims against Chana for damages.

What sum is Mel likely to be awarded?

A
Nothing
B
£6,000
C
£5,500
D
£7,000
5. Anton has breached his contract with Charlotte by failing to complete the sale of some
farmland he owns. He now wants to keep the land for himself, but Charlotte needs it to
graze her cattle on.

Which of the following remedies is most appropriate?

A
Mandatory injunction
B
Liquidated damages
C
Specific performance
D
Asset-freezing injunction
6. Which of the following statements regarding arbitration is correct?
A
 Resolving a dispute by arbitration is cheaper than going to court.
B
Arbitration proceedings are held in public unless the parties agree otherwise.
C
The decision of an arbitrator can be challenged in court.
D
Arbitration proceedings are more time-consuming than taking the matter to court.
7. Natasha hires a car from a car rental company. On arrival at their office she is given a
form, which includes terms and conditions in small print on the back, and asked to sign
it. She does so and pays the hire charge. When she gets into the car, she happens to look
in the glove compartment and sees a document headed 'Limitation of Liability'. This
states that the hire company will not be liable for any injury caused by a defect in the car
unless this is as a result of the company's negligence. While Natasha is driving on the
motorway, the airbag inflates and causes her to crash. She is badly injured.

Which of the following is correct?

A
Natasha’s claim will be valid as she signed the form containing terms and conditions.
B
The claim will be invalid because the liability notice was in the car.
C
It is unclear whether the claim will be valid because the notice in the car may have been
reinforcing the terms and conditions Natasha signed.
8. Which of the following is not a lawful excuse not to perform contractual obligations?
A
The contract has been discharged though frustration.
B
The parties have by agreement permitted non-performance.
C
One party has made it impossible for the other party to perform.
D
Performance has become substantially more expensive than was originally anticipated.
9. Fill in the blanks in the statements below, using the words provided.
• Damages are a common law remedy designed to restore the injured party to the position
they would have been in had the contract been performed .
• A loss outside the natural course of events will only be compensated if the exceptional
circumstances are within the defendant's knowledge at the time of making the contract.
• In assessing the extent of recoverable losses, the claimant is expected to mitigate their
loss.
• A contractual term designed as a penalty clause is unenforceable .
10. If a party is prevented from completing performance of their obligation by the other party, they
may bring a Quantum meruit action to claim for the amount of work already done.
11. Name three types of event or change in current circumstances that will give rise to a
contract being frustrated.
 • Destruction of the subject matter
• Personal incapacity to perform a contract of personal service
• Government intervention
12. True or False
• When a contract is frustrated, under the Law Reform (Frustrated Contracts) Act 1943, any
monies paid to the other party before frustration can be recovered but expenses incurred
by that other party cannot be recovered or offset. ➔ False
• A claimant must do all that they can to reduce the amount of the loss they suffer. ➔ False
• A court will never enforce a liquidated damages clause, as any attempt to prevent the
injured party from pursuing a remedy through the courts is void. ➔ False
13. When an anticipatory breach occurs, the injured party has two options. List these two
options.
• Treat the contract as discharged forthwith
• Allow the contract to continue unless and until there is an actual breach
14. Name two types of Alternative Dispute Resolution (other than negotiation). Arbitration,
Adjudication
15. What is the rule set out in Hadley v Baxendale concerning remoteness of damage?
Recoverable damages should be:
• such as arise naturally from the breach; or
• which the parties may reasonably be supposed to have contemplated, in making the
contract, as the probable result of the breach of it.
16. The amount awarded as damages is what is needed to put the claimant in the position
they would have achieved if the contract had been performed.

What interest is being protected here?

Expectation

Reliance

17. Will a clause in a standard form contract that excludes or restricts liability for the
following be rendered void or subject to the reasonableness test under UCTA?
• For death or personal injury ➔ Void
• For other loss or damage arising from breach of contract or negligence ➔ Subject to
reasonable test
• For breach of the implied condition relating to title ➔ Void
Chapter 4

1. A valid agency relationship can be created by:

• Law, if it is a necessity ➔ Yes
• Ratification ➔ Yes
• Consent between the parties ➔ Yes
• The agent holding themselves out as an agent ➔ No
2. There is a degree of overlap between the rights of an agent and the duties of a principal.
Are the following duties of a principal or of an agent?
• A duty not to retain benefit from the agency relationship ➔ Agent
• A duty to pay agreed remuneration, even if no benefit has been derived from their acts ➔
Principle
• A duty of confidence ➔ Agent
3. Which of the following describes an agent’s right of lien?
A
The right to have any out-of-pocket expenses refunded
B
The right to enter into contracts on behalf of a principal
C
The right to retain property owned by the principal until they have been paid
D
The right to avoid liability on contracts entered into on behalf of the principal
4. Michelle works in Natalia’s building firm. She is employed in the purchases department.
Natalia does not have approved suppliers, but Michelle is required by internal policy to
get Natalia’s approval for all orders. Natalia has been invited to Oliver’s timber yard as
Oliver is keen to get Natalia as a customer. However, Natalia is busy and does not want
to go, so she sends Michelle in her place, telling Oliver that “she deals with buying
anyway”.

While Michelle was at Oliver's timber yard, she noticed a very good price on some
timber. Knowing that Natalia needed some timber soon for an existing project, she
decided to buy it for Natalia. Oliver was delighted and set up a credit account for the
timber in Natalia's name.

Indicate whether the following statements are true or false in respect of Michelle's
authority to make this contract on behalf of Natalia.
• Michelle has no authority to make this contract on Natalia's behalf. ➔ False
• Michelle has express authority to make this contract on Natalia's behalf. ➔ False
• Michelle has implied authority to make this contract on Natalia's behalf. ➔ True
• Michelle has ostensible authority to make this contract on Natalia's behalf. ➔ True
5. Altair entered into a contract with Eugenie. He was acting with authority as Florence's
agent, but Eugenie was not aware of this at the time. Subsequently, Florence breached
the contract with Eugenie, who is now aware that Florence is the principal.
Who may Eugenie sue for the breach?
 A
Altair only
B
Florence only
C
Altair and Florence jointly
D
Either Altair or Florence but not both
6. Fill in the blanks using the words below.
Agency is the relationship that exists between two legal persons, the principal and the
agent, in which the function of the agent is to form a contract between their principal and a
third party.
7. Identify the four ways in which an agency can arise.
• Agency by consent
• Agency by estoppel
• Agency of necessity
• Ratification
8. Which of the following is not a necessary condition of agency of necessity?
A
Agent has no practical way of contacting principal.
B
A pressing need for action exists.
C
The agent must have the principal's permission.
D
The agent must act in good faith in the interests of the principal.
E
The action must be reasonable and prudent in the circumstances.
9. What is the best definition of ostensible authority?
A
The authority that the principal represents to other persons they have given to the agent
B
The authority implied to other persons by the agent's actions
10. Name the three types of authority that an agent might have.
• Actual express authority
• Actual implied authority (incidental and usual)
• Ostensible or apparent authority
11. True or false
• A principal may, in certain circumstances, ratify the acts of the agent, which has
retrospective effect. ➔ True
• An agent may disobey the instructions of the principal if they believe disobedience to be
in the best interests of the principal. ➔ False
• Provided an agent has authority and is known to be an agent, they can never have any
personal liability under the contract and only the principal can be liable. ➔ False
Chapter 5

1. For a party to have a liability in tort, there must already be a contractual relationship
between the parties. True or False?

True

False

2. Which of the following tests will be considered in assessing whether a duty of care
exists?

Whether there is a sufficient relationship of proximity between defendant and claimant

Whether the damage was reasonably foreseeable as a result of the defendant's

carelessness

Whether the claimant acted in good faith and without carelessness

Whether it is just and reasonable for the law to impose liability

(1) and (2) only

(3) and (4) only

(1), (2) and (3) only

(1), (2) and (4) only

3. Sharnie is training to be an ICAEW Chartered Accountant and is concerned about being

liable to clients in tort.

What is the standard of care expected of Sharnie?

That of a reasonable accountant

That of a reasonable trainee accountant

C
 That of a reasonable person

That of an inexperienced accountant

4. Lemondo LLP is preparing to audit the accounts of Delittle plc.

If the accounts are found to have been audited negligently, to whom would Lemondo LLP
have owed a duty of care?

Delittle's shareholders as a whole

Individual shareholders of Delittle who lose money as a consequence of the negligence

Delittle's directors who appointed Lemondo LLP as auditor

Any investors in Delittle plc who lose out financially due to the negligence

5. In order to show that there exists a duty of care not to cause financial loss by negligent
misstatement, the claimant must show that:

The person making the statement did so in a professional capacity.

The claimant was the only person likely to rely on the statement.

The claimant was introduced to the person making the statement.

The claimant actually relied on the statement and suffered loss as a result.

(1) and (4) only

(1), (2) and (4) only

(1), (3) and (4) only

(1), (2), (3) and (4)

6. Claudia is a trainee accountant employed in an accountancy firm. She meets Daniel at a

party and they date for three months. During that time, Daniel asks for some tax advice.
 Claudia looks up some information at work and then goes home and gives him advice, based
on the information she has obtained from the office. She has misinterpreted the tax law and
gives incorrect advice to Daniel. A reasonably competent accountant would not have given
the same advice to Daniel.

If Daniel decides to sue Claudia, indicate whether or not she could rely on any of the
following factors as a complete or partial defence.

• She was merely a trainee and therefore the objective standard of care required is lower.
➔ No
• She was in a relationship with Daniel, therefore there is a rebuttable presumption that
she is not intending him to use her advice professionally. ➔ No
• Daniel had intended to do as she advised anyway, so was not affected by her advice. ➔
Yes

Daniel might succeed in a claim for negligence against:

• Claudia ➔ Yes
• Claudia's firm ➔ No
• Claudia's firm and Claudia ➔ No
7. In cases where contributory negligence is established, which of the following
statements is correct?

The defendant has proved that they did not owe the claimant a duty of care.

The defendant has proved that they did not breach a duty of care owed to the claimant.

The defendant has proved that the breach of their duty of care did not cause the harm to the
defendant.

The defendant has proved that the claimant also acted negligently thereby contributing
to the claimant's loss or injury.

8. Leilani works as a home-delivery driver for a major supermarket. One day while she was
driving home from work in her own car, she crashed into another vehicle. When she
stepped out of her car, she was still wearing her high-vis jacket, which bore the name of
her employer on the back. The driver of the other vehicle saw this and has decided to
sue Leilani's employer, saying it is vicariously liable.

Is Leilani's employer vicariously liable for her actions?

A
 Yes

No

9. In tort no previous transaction or contractual relationship need exist.

True

False

10. The 'neighbour' principle was established by the landmark case:

Caparo v Dickman 1990

Hedley Byrne v Heller 1963

Donoghue v Stevenson 1932

The Wagon Mound 1961

11. There are three essential elements for a negligence claim to be successful. What are
they?
• Duty of care
• Breach of that duty
• Consequential damage, injury or loss
12. True or False
• When the court applies the maxim res ipsa loquitur, it is held that the facts speak for
themselves and the defendant does not have to prove anything, since the burden of proof
is on the claimant. ➔ False
• "A public company's auditors owe no duty of care to the public at large who rely on the
audit report in deciding to invest." This is the decision from Caparo. ➔ True
• Vicarious liability is a mechanism that can move liability for a tort from an employee to
their employer. ➔ False
• If an agent is liable in tort, the claimant may enforce the vicarious liability of the principal
only where they are unable to recover sufficient damages from the agent. ➔ False
13. What was the leading case on negligent misstatement that allowed recovery of non-
physical damage? Hedley Byrne v Heller 1963
14. Which of the following would prevent a claim for negligence from being successful?
 A
The claimant followed a course of action regardless of the acts of the defendant.
B
The defendant caused the harm to the claimant.
C
The defendant was not yet fully qualified.
D
The parties were proximate and the harm suffered was reasonably foreseeable.
E
An intervening act broke the 'chain of causation'.
F
The duty of care was restricted by public policy.
15. Name four of the matters to be taken into account by the court in considering cases of
professional negligence.
• The relationship between the parties
• The size of any class to which the recipient belonged
• The state of knowledge of the maker
• The reliance by the recipient
16. In order for the employer to be vicariously liable, under which circumstances must the
tort have been committed?

Tort must have been committed:

• by an employee; and
• the employee must have been acting in the course of their employment (in a way that
had a close connection with the scope of their employment).