THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES UNIT 2 CONTRACT LAW *

Transcription

1 12 January 2015 Level 3 CONTRACT LAW Subject Code L3-2 THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES UNIT 2 CONTRACT LAW * Time allowed: 1 hour and 30 minutes plus 15 minutes reading time Instructions to Candidates You have FIFTEEN minutes to read through this question paper before the start of the examination. It is strongly recommended that you use the reading time to read the question paper fully. However, you may make notes on the question paper or in your answer booklet during this time, if you wish. The question paper is divided into TWO sections. You must answer ALL the questions from Section A. There are three scenarios in Section B. You must answer the questions relating to ONE of the scenarios in Section B ONLY. Write in full sentences a yes or no answer will earn no marks. Candidates must comply with the CILEx Examination Regulations. Full reasoning must be shown in answers. Statutory authorities, decided cases and examples should be used where appropriate. Information for Candidates The mark allocation for each question and part question is given and you are advised to take this into account in planning your work. Write in blue or black ink or ballpoint pen. Attention should be paid to clear, neat handwriting and tidy alterations. Complete all rough work in your answer booklet. Cross through any work you do not want marked. Do not turn over this page until instructed by the Invigilator. * This unit is a component of the CILEx LEVEL 3 PROFESSIONAL QUALIFICATIONS and LEVEL 3 LEGAL SERVICES KNOWLEDGE QUALIFICATIONS Page 1 of 12

2 BLANK PAGE Page 2 of 12

3 SECTION A (Answer ALL questions in Section A) 1. Define a contract. (3 marks) 2. Define a bilateral contract. (1 mark) 3. Explain the nature and effect of a counter-offer. (3 marks) 4. How is consideration defined in Currie v Misa (1875)? (1 mark) 5. Identify the presumption regarding legal relations in social and domestic circumstances and explain one situation in which the presumption may be rebutted. (3 marks) 6. Identify and explain two ways, at common law, in which the courts may imply terms into a contract. (4 marks) 7. Define a warranty in a contract and explain the effect of the breach of a warranty. (4 marks) 8. Explain the effect of a negligent misrepresentation and the remedies available. (5 marks) 9. Identify and explain any two exceptions to the entire performance rule. (4 marks) 10. Explain the remedy of an injunction. (2 marks) (Total Marks for Section A: 30 marks) Page 3 of 12 Turn over

4 SECTION B (There are three scenarios in Section B. Answer the questions relating to ONE of the scenarios ONLY) Scenario 1 Ali owns a shop. Before Christmas he put the following notice in the shop window: Christmas Bargains Each item in our bargain bin is available for 2. Come inside and grab a bargain. Bev, a customer, saw some expensive perfume in the bargain bin. At the checkout, Carol, a shop assistant, refused to sell Bev the perfume for 2. Don, a supplier, advertised some chocolates for sale at 25 per kg. On 1 December, Ali told Don that he would buy the chocolates for 20 per kg but Don refused to sell the chocolates at that price. Later, Don changed his mind and told Ali that he would supply the chocolates for 20 per kg. Ali says that he will now only buy them for 15 per kg. Ali decided to employ a Santa Claus in his shop from 14 to 24 December. At the end of November, before advertising the job, he asked his friend, Eddie, if he would like the job. Eddie said he would think about it and let him know. As Ali had not heard from Eddie by 10 December, he advertised the job and, on 13 December, Ali employed Fred. Later that day Eddie told Ali that he would do the job. Ali had some computer keyboards for sale in his shop for 10 each. Gamila saw these and asked Ali if he would sell her 10 for 75. Ali said he would consider it. Two days later Gamila sent Ali the following Regarding my offer to buy computer keyboards, as I have not heard to the contrary, I assume my offer has been accepted and will collect the keyboards this afternoon. Page 4 of 12

5 Scenario 1 Questions 1. (a) Distinguish between an invitation to treat and an offer. (5 marks) (b) Explain whether Bev can insist on buying the perfume for 2. (7 marks) (Total: 12 marks) 2. Explain whether there is a valid contract between Don and Ali for the sale of the chocolates. (6 marks) 3. (a) Explain the different ways in which an offer may be terminated and whether Eddie could have accepted Ali s offer on 13 December. (9 marks) (b) How does the law on intention to create legal relations apply to Ali and Eddie? (7 marks) (Total: 16 marks) 4. Explain whether Gamila is correct to assume that her offer for the computer keyboards has been accepted by Ali. (6 marks) (Total Marks for Scenario 1: 40 marks) Page 5 of 12 Turn over

6 Scenario 2 Geoff owns a theatre. He arranged a Christmas show to run from 17 to 24 December. He employed Karen, a famous actor, as the lead actor and Leo as a supporting actor. Both were required to attend rehearsals each day between 1 and 16 December. Karen missed all the rehearsals and the first night of the show; Leo missed the first four rehearsals. On 20 December, the theatre burned down. Geoff moved the show to a nearby theatre, which he hired for the rest of the show s run. Geoff also owns a flat which he rents to Harriet. Her friend Imran was looking for somewhere to live. As Harriet was short of money, she asked Imran if he wanted to move in with her to help pay the rent. He agreed to do so if Harriet had the flat repainted. Jim was employed in a nearby factory. Harriet agreed with Jim that she would pay him 700 to paint her flat at weekends during December if he paid for the paint. Jim painted half the flat. He then said that he could not afford to buy the rest of the paint to complete the job until he was paid by his employer at the end of December. Because Harriet wanted the job completed by 1 January, she agreed to buy the rest of the paint and said that she would still pay him the full 700 plus an extra 50 if he completed the job as agreed. Jim completed the work on time. Harriet has bought a carpet to match the new paint. When Geoff later came to collect the rent he offered to pay her for the carpet. Page 6 of 12

7 Scenario 2 Questions 1. (a) Identify and explain three ways in which a contract may be discharged. (6 marks) (b) (c) Explain whether Geoff s contract with Leo is discharged. Explain whether Geoff s contract with Karen is discharged. (4 marks) (4 marks) (d) Explain whether those customers who have bought tickets to the Christmas show may treat their contracts with Geoff as discharged. (5 marks) (Total: 19 marks) 2. (a) Identify and explain the rules governing what amounts to valid consideration. (8 marks) (b) (c) Explain whether there is valid consideration between Harriet and Jim for the payment of the extra 50. (9 marks) Explain whether Harriet has a valid claim for the cost of the carpet if Geoff does not pay her for it. (4 marks) (Total: 21 marks) (Total Marks for Scenario 2: 40 marks) Page 7 of 12 Turn over

8 Scenario 3 Mike owns a garage and car showroom from which he sells used cars. Nadir wanted a car which was very economical to run because he drives a long way to work each day. He visited Mike s car showroom and explained this to Mike. Mike advised him to buy a Minicar which he had in his showroom. Mike told Nadir that the car would do 70 miles per gallon (mpg). Nadir said that he would think it over and went away. A week later he returned to Mike s showroom, saw that the car was still for sale and bought it. However, Nadir has since discovered that the car can only do a maximum of 50 mpg. Olivia has previously used Mike s garage for servicing her car. She recently brought her car in for its latest service. Before the service was carried out, Mike asked Olivia to sign a form authorising Mike to carry out the service. The form contained a clause which stated that Mike would not be liable for any damage caused to the car whilst it was in his possession. Olivia signed the form in the space provided at the end of the form. After Olivia had parked her car on the garage forecourt, one of Mike s salesmen also parked his car on the garage forecourt but forgot to put the handbrake on. The salesman s car rolled down a slope into Olivia s car, causing considerable damage to its bodywork. Parmjit visited Mike s showroom and saw a sports car which he liked. He thought it was rather expensive. Mike told him that the price was higher because the car had belonged to Rick Stewart, a famous singer. On the strength of this statement, Parmjit bought the car but has now discovered that the previous owner was not the famous singer but simply someone with the same name. Page 8 of 12

9 Scenario 3 Questions 1. (a) Identify and explain four factors used to distinguish a representation and a term of the contract. (10 marks) (b) Explain whether Mike s statement that the Minicar could do 70 mpg was a representation or a term of his contract with Nadir. (9 marks) (Total: 19 marks) 2. (a) Identify and explain three ways in which an exclusion clause may be incorporated into a contract. (6 marks) (b) Explain whether Olivia could bring a successful claim against Mike for the damage to her car s bodywork. (8 marks) (Total: 14 marks) 3. Explain whether Parmjit could bring a successful claim against Mike for misrepresentation. (7 marks) (Total Marks for Scenario 3: 40 marks) End of Examination Paper 2015 The Chartered Institute of Legal Executives Page 9 of 12

10 BLANK PAGE Page 10 of 12

11 BLANK PAGE Page 11 of 12

12 BLANK PAGE Page 12 of 12