EQB 2 Contract Termination

Subsidiary Ltd entered into a contract to purchase goods from Parent plc. The contract contained a clause restricting the potential liability of Parent plc in the event of the goods supplied not being of satisfactory quality. Assuming Parent plc supplies unsatisfactory goods, can it rely on the exclusion clause?

• Yes, if the clause restricting liability is reasonable applying the test set out in the Unfair Contract Terms Act (UCTA) 1977

• No, because Parent plc is a public company and as such cannot rely on an exemption clause

• No, because Subsidiary Ltd is the weaker party

• Yes, even if the clause is unreasonable because the UCTA 1977 does not apply to business-to-business transactions

Crunch Ltd agreed to sell its factory to Cool Cookies Ltd for £590,000 but after contracts were exchanged, the market value increased considerably and Crunch Ltd sold the factory to Krisp plc for £700,000. There was no other available property that was comparable.

In the event that the court award damages to Cool Cookies Ltd, are these likely to be in the region of ....

• £590,000

• £110,000

Barney, who operates a vehicle transporter, agreed to deliver a new van to Norman who ran a business delivering refrigerated foods to households in a remote corner of Scotland. Barney had mechanical problems with the transporter and ended up being 15 days late reaching Norman. Norman sued Barney for:

(1) the loss of earnings from his inability to make his usual deliveries;

(2) the loss of a special contract that he had entered into with a local food supply company to store 50 kg of fresh lobster over the four days when he would not be using the van. He was particularly cross about losing this contract which he had expressly told Barney all about, because he felt there was potential for more business with the company in the future; and

(3) distress which was caused to Barney because he let down his usual customers.

What can Norman recover in damages?

• (1) only

• (2) and (3) only

• (1) and (2) only

• (1), (2) and (3)

Lord Evans engaged Gavin to ride his horse in the Grand National. Three months before the race, Gavin wrote to Lord Evans saying that he was not willing to ride the horse in the race. Lord Evans wrote back to Gavin saying that he has decided to treat the contract as discharged. Which of the following statements is correct?

• Lord Evans cannot claim damages from Gavin because Gavin withdrew from the contract before performance was due

• Lord Evans remains liable to Gavin for any contractual obligations on his part

• Lord Evans can claim damages for any loss he has suffered but his right to do is operative only from the date of the race

• Lord Evans remains liable to Gavin for any contractual obligations on his part which had arisen before Gavin pulled out of the contract

Jemima arranged a weekend holiday with Hassle Free Holidays Ltd for the members of the Amateur Dramatics Society of which she was a member. The society was going to see a Gilbert & Sullivan production in Oxford. Hassle Free Holdings Ltd was obliged to endeavour to accommodate all 45 members in one hotel and had booked the Riverside Hotel. However, the night before the society was due to travel, the Riverside Hotel was burned down and Hassle Free Holidays Ltd claimed that it could keep the deposit but was under no further obligation to the Society because the contract had been discharged by frustration.

As a general rule, where a contract is discharged by frustration, should any deposit received be repaid?

• Yes

• No

Jason employed Joseph to build him a Mirror sailing dinghy. He specified that he wanted the hull to be painted 'Moisture Blue' and that the tow straps should be webbed nylon. The agreed contract price was £5,000, payable on delivery of the boat. When Joseph delivered the boat, Jason discovered that Joseph had actually used 'Sky Blue' paint and that the tow straps were, in fact, canvas only. Apart from these points Jason was pleased with Joseph's work. Which of the following best describes the legal position?

• Joseph has substantially performed his contractual obligations and is entitled to receive the contract price

• Joseph is entitled to receive the contract price less a sum in respect of those obligations that were not properly performed

• The contract has been sufficiently discharged and Jason must pay Joseph the agreed contract price

• Joseph has not performed his contractual obligation properly and is therefore not entitled to receive any payment until he rectifies the outstanding defects

Esther agreed to bake and freeze 100 birthday cakes for her friend Jane, who was planning to open a small shop selling home-baked products, at a total price of £200. When Esther had frozen 60 cakes, she learned that Jane had been unable to secure a lease of the retail premises. She telephoned Jane to confirm that she had baked 60 cakes and was all ready to bake the last 40, but Jane said she had decided to go back to teaching instead. Esther feels very let down and wants nothing more to do with Jane. Which of the following best describes the legal position?

• Esther has no cause of action against Jane because she could have avoided any loss by waiting until Jane had secured the lease

• Esther can recover the agreed sum of £200 from Jane because she would have been entitled to this sum had Jane not been in breach of contract

• Esther has no cause of action against Jane because she can still use or sell the cakes, so she has not suffered any loss

• Jane is in breach of contract and Esther can sue for damages or bring a quantum meruit claim for £120 in respect of the 60 cakes already prepared