THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES UNIT 2 CONTRACT LAW *

Transcription

1 8 June 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

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3 SECTION A (Answer ALL questions in Section A) 1. Identify the two requirements for the formation of an agreement. (2 marks) 2. Explain the differences between a unilateral and a bilateral contract. 3. Explain the postal rule. 4. Explain what is meant by the rule that consideration must not be past. (2 marks) 5. Explain what is meant by the rule that consideration must be sufficient. (2 marks) 6. Identify and explain one situation in which the presumption regarding legal relations in social and domestic agreements may be rebutted. (2 marks) 7. Describe two terms implied by the Sale of Goods Act 1979, including section numbers. 8. Explain the effect of a breach of a condition in a contract. 9. Identify any three bars to rescission of a contract in the event of a misrepresentation. 10. Explain the rule that performance of a contract should be complete and exact. (2 marks) 11. What must a claimant establish to be awarded damages for breach of contract? (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 Andy has a business selling bathroom supplies. He has recently entered into two contracts, one for the purchase of baths from a manufacturer and the other for the sale of a bath to a customer. Andy asked Bhadra, who manufactures luxury baths, for a quotation for 10 baths. Bhadra sent Andy a quotation for 2,000. The quotation was subject to Bhadra s standard terms. These terms included a price variation clause allowing Bhadra to charge more in the event of any increase in the cost of materials used in manufacture. Andy ordered 10 baths from Bhadra. The order was on Andy s standard terms which did not include a price variation clause. At the bottom of Andy s order form, there was a tear off slip for Bhadra to sign. Bhadra signed this slip and returned it to Andy. Bhadra delivered the baths and invoiced Andy for 2,500. A letter attached to the invoice stated that the price had been increased in accordance with the price variation clause in Bhadra s standard terms. Andy placed the following advertisement in the Kempston News. LUXURY BATHS FOR SALE Relax for longer in one of our new range of luxury insulated baths. You will be amazed how long the water stays hot. Call Andy on and ask for more details. Candice wanted a new bath and telephoned Andy. Andy explained to her that the water remained hotter for longer because the bath is much thicker than a normal bath and has a layer of insulation, which also makes the bath stronger. Relying on these statements, Candice immediately ordered one of the baths. After Candice s plumber had correctly installed the bath, she found that the water did not stay hot for longer. A month later, Candice noticed that the bath had cracked and was leaking. Page 4 of 12

5 Scenario 1 Questions 1. (a) Describe what is meant by the battle of the forms. (b) Explain whether Andy must pay Bhadra the increased price of 2,500. (6 marks) (Total: 10 marks) 2. Explain whether Andy s advertisement is an offer or an invitation to treat. 3. (a) Explain the difference between a representation and a term. (6 marks) (b) Advise Candice whether Andy s statement on the telephone that the bath s insulation would keep the water hotter for longer is a representation or a term. (10 marks) (Total: 16 marks) 4. Candice wants to bring an action against Andy in respect of the bath. Explain whether she can rely on: (a) s13(1) Sale of Goods Act 1979; (b) s14(2) Sale of Goods Act (5 marks) (5 marks) (Total: 10 marks) (Total Marks for Scenario 1: 40 marks) Page 5 of 12 Turn over

6 Scenario 2 Donna owns a caravan on a caravan park. Donna lets the caravan to holidaymakers each summer. Her first letting for this summer was due to start on 18 April. On 20 March, the caravan was damaged when a tree was blown down onto it. Eddy has a caravan repair business. Donna agreed with Eddy to have the caravan repaired and returned to the caravan park by 15 April for a fee of 5,000. This would allow Donna just enough time to have the caravan cleaned and reconnected to the services (water, electricity and drains) in time for the first letting. Eddy took the caravan to his workshop to carry out the repairs. On 11 April, Eddy telephoned Donna and told her that he had been very busy and would not be able to complete the repairs on time. Donna therefore promised Eddy an extra 500 if he could complete the repairs and return the caravan by 15 April. Eddy agreed to this. On 15 April, Eddy returned the caravan and reconnected it to the services himself. Donna was so grateful to Eddy for reconnecting the services that she offered to pay him an additional 250 for doing so. Eddy sent Donna an invoice totalling 5,750, which included the extra sum of 500 and the additional 250. Donna paid him 5,000 but refused to pay him either the 500 or the 250. Frank is a cleaner. Donna agreed with Frank that he would clean the caravan for 50. After Frank had started to clean the caravan Donna told him he was no longer needed as she would clean it herself. On 5 June, after heavy rain, the caravan park was flooded and all the caravans on the site were destroyed. Donna had to cancel all further bookings. Gurjit had already paid Donna a deposit of 100 for a holiday he had booked in the caravan. Page 6 of 12

7 Scenario 2 Questions 1. (a) State one definition of consideration. (b) Explain whether Donna is legally obliged to pay Eddy the extra 500 for completing the repairs on time. (9 marks) (Total: 12 marks) 2. Explain whether Donna: (a) is legally obliged to pay Eddy the additional 250 for connecting the caravan to the services; (6 marks) (b) would be legally obliged to pay the additional 250 if she had asked Eddy to connect the caravan to the services. (Total: 9 marks) 3. (a) Identify and explain three exceptions to the entire performance rule. (6 marks) (b) Explain whether Frank can claim for the cleaning work he has done. (6 marks) (Total: 12 marks) 4. Explain to Donna whether she is legally obliged to refund Gurjit s 100 deposit. (7 marks) (Total Marks for Scenario 2: 40 marks) Page 7 of 12 Turn over

8 Scenario 3 Hannah is a toy manufacturer and her father Ian owns a gift shop. Ian placed an order with Hannah for a box of teddy bears suitable for babies aged 0 to 18 months old, and 12 pink and 12 blue balls. He believed that the pink balls would appeal to girls and the blue ones to boys, although he did not tell Hannah this. When the order was delivered, the teddy bears supplied were not suitable for children under 36 months. All the balls supplied by Hannah were blue. A year ago, Hannah and her parents, Ian and June, agreed to form a syndicate to take part in a weekly lottery. It was agreed that they would each contribute 2 per week, that June would buy three 2 tickets every Friday and that any winnings would be divided equally. Each week, June asked Hannah for her 2. She always promised to pay but rarely did. Last month, the syndicate won 6 million and the winnings were paid to June. Hannah has asked for her share ( 2 million). Ian and June have refused to pay her. Hannah advertised a range of action figures in a trade journal saying that they are the best action figures ever, no 10 year old can resist them. Kamil, who owned a toy shop, saw the advertisement and ordered 50 action figures. He has not been able to sell any of them as his 10-year-old customers all say that they are too boring. Page 8 of 12

9 Scenario 3 Questions 1. Explain: (a) the difference between a condition and a warranty; (b) (c) what remedy may be available to Ian for the breach of contract regarding the supply of the teddy bears; what remedy may be available to Ian for the breach of contract regarding the supply of the balls. (Total: 12 marks) 2. (a) Explain the presumption regarding intention to create legal relations which would apply to the contract between Ian and Hannah. (5 marks) (b) Explain the presumption regarding intention to create legal relations which would apply to the agreement between Hannah and her parents in relation to the lottery syndicate. (5 marks) (Total: 10 marks) 3. The Results Determination Panel identified significant issues with Scenario 3 question 3. This question was removed and the candidates marks were adjusted accordingly to ensure that candidates taking the questions for scenario 3 were not disadvantaged. 4. (a) Explain the difference between a mere puff, a representation and a term. (6 marks) (b) Explain the status and effect of the statement in Hannah s advertisement for the action figures. (Total: 9 marks) (Total Marks for Scenario 3: 40 marks) End of Examination Paper 2015 The Chartered Institute of Legal Executives Page 9 of 12

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