LW: Obligations (contract and tort)

Answer: A. A simple contract requires offer, acceptance, consideration and an intention to create legal relations (with capacity also assumed). Option B is wrong — most simple contracts need not be in writing; writing is required only for certain contracts such as those for the sale of land. Option C omits acceptance, intention and offer. Option D invents formalities that the law does not generally require for a simple contract.

Answer: B. The display of priced goods is an invitation to treat; the customer makes the offer at the checkout, which the retailer may accept or reject (Pharmaceutical Society of Great Britain v Boots). Option A is wrong — the display is not itself an offer. Option C confuses the position with cases such as Carlill, which involved a specific promise. Option D is wrong — no prior offer exists for the display to counter.

Answer: B. The advertisement was a unilateral offer to the world: it promised a specific reward to anyone who used the product as directed and still caught flu, and the company's statement that money had been deposited at a bank showed a genuine intention to be bound. Option A is wrong — advertisements are usually invitations to treat. Option C is factually wrong — there was no signed agreement. Option D is irrelevant to whether the wording constituted an offer.

Answer: C. A counter-offer destroys the original offer, which then cannot later be accepted (Hyde v Wrench); it also amounts to a fresh offer that the original offeror may accept or reject. Option A is wrong — a response on different terms is not an acceptance. Option B is wrong — the original offer does not survive a counter-offer. Option D is wrong — a counter-offer must itself be accepted before any contract arises.

Answer: A. An offer may be revoked at any time before acceptance, but the revocation must actually be communicated to the offeree to be effective (Byrne v Van Tienhoven). Option B is wrong — offers are generally revocable before acceptance. Option C is wrong — the postal rule applies to acceptance, not revocation, which takes effect on receipt. Option D is wrong — revocation communicated by a reliable third party can be effective (Dickinson v Dodds).

Answer: B. Under the postal rule, acceptance takes effect when the letter is properly posted, not when it is received (Adams v Lindsell), provided post was a reasonable means of reply. Option A states the ordinary rule for instantaneous communications, not the postal rule. Option C is wrong — the offeror's reading of the letter is irrelevant to the timing. Option D is wrong — an uncommunicated mental decision is never an acceptance.

Answer: B. For instantaneous communications, acceptance is effective when and where it is received by the offeror (Entores v Miles Far East), not when sent. Option A applies the postal rule, which does not govern instantaneous methods. Option C invents a requirement for confirmation that the law does not impose. Option D is wrong — the postal rule is an exception confined to non-instantaneous post, not instantaneous communications.

Answer: A. Consideration is the bargain element of a contract: something of value given in return for a promise — a benefit to the promisor or a detriment to the promisee. Option B confuses consideration with a formal written document. Option C is wrong — motive is not the same as consideration in law. Option D is irrelevant to the formation of the contract; it concerns enforcement costs, not the bargain.

Answer: B. Consideration must be 'sufficient' — real and recognised by law — but need not be 'adequate', meaning the courts will not weigh whether the bargain was economically fair (Chappell v Nestlé). Option A is wrong — equal value is not required. Option C is wrong — consideration can take many forms, not only money. Option D is wrong — the courts do not generally rescue a party from a bad but freely made bargain.

Answer: D. The general rule is that past consideration is not good consideration: an act already completed before a promise is given cannot be the price of that promise (Re McArdle). Option A states the opposite of the general rule. Option C invents an exception that does not exist for land. Option B is wrong — past consideration is distinct from executory consideration, which is a promise of future performance.

Answer: B. The doctrine of privity provides that, as a general rule, only the parties to a contract acquire rights and obligations under it. Option A overstates the position. Option C is wrong — a contract binds only the parties, not the world. Option D is too absolute; although the Contracts (Rights of Third Parties) Act 1999 created limited exceptions, the basic doctrine is that third parties cannot enforce a contract.

Answer: A. In social and domestic agreements there is a rebuttable presumption that the parties do not intend to create legal relations (Balfour v Balfour), though this can be rebutted by evidence (Merritt v Merritt). Option B states the presumption applying to commercial agreements, the reverse situation. Option C is too absolute. Option D is wrong — the sum involved is only one factor and not the sole test.

Answer: D. In commercial agreements there is a strong presumption that the parties intend to create legal relations, but it can be rebutted by sufficiently clear wording, such as an express 'binding in honour only' clause (Rose & Frank v Crompton). Option A ignores the presumption. Option C is wrong — a deed is not required. Option B is wrong — legal intention does not depend on whether a lawyer drafted the document.

Answer: D. The maker's marital status is irrelevant to whether a statement is a term or a representation. The courts do consider the importance attached to the statement, the relative expertise of the parties, the timing of the statement, and whether it was put into a written contract. Options A, B and C are all genuine factors the courts weigh; only option D plays no part in the distinction.

Answer: A. A condition is a fundamental term: its breach allows the injured party to terminate (treat the contract as repudiated) and claim damages. A warranty is a minor term: its breach gives a right to damages only, not termination. Option B reverses the two. Option C is wrong — only breach of condition permits termination. Option D is wrong — damages are available for breach of either type of term.

Answer: B. An exclusion clause must first be incorporated into the contract — typically by signature, by reasonable notice given before or at the time of contracting, or by a previous consistent course of dealing. Option A invents a non-existent court-approval step. Option C is nonsensical. Option D confuses exclusion clauses with company charge registration, which is unrelated.

Answer: D. Reasonable notice of an exclusion clause must be given before or at the time the contract is made. A notice seen only after the contract was concluded at the reception desk is not incorporated (Olley v Marlborough Court). Option A is wrong — later sight does not cure late notice. Option C invents an irrelevant distinction. Option B is wrong — a notice in the room comes too late, after the contract was formed at check-in.

Answer: A. A contract may be discharged by performance, by agreement between the parties, by breach (giving the innocent party the right to treat it as at an end), or by frustration. Option B is too narrow — performance is only one method. Option C is wrong — most contracts end without any court order. Option D is wrong — a unilateral change of mind is not a recognised method of discharge and may itself be a breach.

Answer: A. Where performance becomes impossible, illegal, or radically different through no fault of the parties after formation — such as destruction of the subject matter (Taylor v Caldwell) — the contract may be discharged by frustration. Misrepresentation (option B) concerns false pre-contract statements. Duress (option C) concerns illegitimate pressure. Ratification (option D) is the adoption of an act done without authority, which is unrelated to impossibility of performance.

Answer: B. Under Hadley v Baxendale, recoverable losses are those arising naturally from the breach in the ordinary course of things, plus any losses that were within the reasonable contemplation of both parties at the time of contracting. Option A is too wide — truly unforeseeable losses are too remote. Option C invents a cash requirement. Option D is wrong — damages compensate the innocent party, not the party in breach.

Answer: A. A claimant must take reasonable steps to mitigate, that is to reduce, the loss caused by the breach, and cannot recover for losses that reasonable mitigation would have avoided. Option B is wrong — there is no duty to accept the first offer. Option C is wrong — passivity that allows loss to mount breaches the duty to mitigate. Option D is wrong — deliberately increasing loss is the opposite of mitigation.

Answer: C. A clause fixing a sum in advance is enforceable as liquidated damages if it is a genuine pre-estimate of loss, but unenforceable as a penalty where the sum is extravagant or unconscionable and intended to deter breach rather than compensate. Option A is wrong — genuine pre-estimates are valid. Option B describes an enforceable clause, not one the court refuses. Option D is irrelevant to the penalty test.

Answer: C. Specific performance is a discretionary equitable remedy granted where damages would be inadequate, typically for unique subject matter such as land or a rare item. Option A is wrong — courts will not normally order specific performance of personal-service contracts. Option B is wrong — if damages are adequate, specific performance is refused. Option D is wrong — equity will not enforce an illegal contract.

Answer: D. A tort is a civil wrong arising independently of any contract, for which the usual remedy is unliquidated damages assessed by the court. Option A describes breach of contract, a separate area. Option C describes a crime, not a tort, though some conduct can be both. Option B is a regulatory/company-law default, not a tort.

Answer: A. Donoghue v Stevenson established the modern law of negligence and the 'neighbour principle': you must take reasonable care to avoid acts or omissions likely to injure your neighbour. Salomon v Salomon (option B) concerns separate corporate personality. Carlill (option C) concerns unilateral offers in contract. Hadley v Baxendale (option D) concerns remoteness of damage in contract — none of these is the duty-of-care authority.

Answer: A. Negligence requires a duty of care owed to the claimant, a breach of that duty (falling below the standard of the reasonable person), and damage caused by the breach that is not too remote. Option B lists the elements of a contract, not a tort. Option C lists formation/validity factors in contract. Option D describes elements of fraud, a different cause of action.

Answer: B. Causation in negligence requires factual causation — the loss would not have occurred 'but for' the breach — and that the damage was a reasonably foreseeable, not too remote, consequence (The Wagon Mound). Option A is wrong — negligence does not require intention. Option C is wrong — generally actual damage, not mere distress, is needed. Option D is wrong — no contract is required for a negligence claim.

Answer: A. Vicarious liability makes an employer liable for torts committed by an employee in the course of employment, even without fault by the employer. Option B describes acts outside the course of employment, for which the employer is generally not liable. Option C is wrong — express authorisation is not required; a close connection with the work suffices. Option D is wrong — employers are not usually vicariously liable for independent contractors.

Answer: C. Following Caparo v Dickman, a duty for negligent misstatement arises where there is sufficient proximity: the adviser knew the statement would be communicated to a specific person or class for a particular purpose, and it was relied on for that purpose. Option A is too wide — there is no duty to the whole world. Option B is wrong — liability can arise in tort without a contract. Option D is too absolute and contradicts Hedley Byrne.

Answer: C. Passing off protects the goodwill a trader has built up against a competitor who misrepresents their goods or business as being the claimant's or connected with them, causing damage. Option A concerns reputation/defamation, not passing off. Option B is lawful competition — a genuinely different name is not passing off. Option D is an employment matter, possibly restraint of trade, not passing off.

Answer: D. Contributory negligence is a recognised partial defence: where the claimant's own want of care contributed to the harm, damages are reduced to reflect their share of responsibility, and consent to the risk (volenti) can be a full defence. Option A is irrelevant — negligence needs no contract. Option B is wrong — corporate status is not a defence. Option C is wrong — the size of the loss is not a defence.

Answer: C. Statute implies certain terms into contracts; for example, the Consumer Rights Act 2015 implies that goods supplied by a trader will be of satisfactory quality. Option A is an express term, not an implied one. Option B describes an alleged express term, not a statutory implied term. Option D is not a term at all — a party cannot unilaterally add terms after the contract is made.

Answer: D. Anticipatory breach occurs where a party declares in advance, by words or conduct, that they will not perform; the innocent party may sue at once or wait for the due date (Hochster v De La Tour). Option A is not a breach. Option B states the timing incorrectly — anticipatory breach precedes the due date. Option C confuses anticipatory breach with the condition/warranty distinction, a separate matter.

Answer: C. For an innominate term the courts look at the effect of the breach: if it deprives the innocent party of substantially the whole benefit of the contract, termination is available; otherwise only damages (Hong Kong Fir). Options A and B are wrong because the term is not classified as a condition or warranty in advance. Option D is wrong — innominate terms can certainly be breached.