CILEx L3 Contract Law 2

Question 1

In Balfour v Balfour [1919], why was the wife's claim for maintenance payments unsuccessful?

Accepted Answer

There was no intention to create legal relations between spouses

Answer

The Court of Appeal held that agreements between spouses living in amity are presumed not to be intended to create legal relations. The husband's promise to pay his wife £30 per month while she remained in England for health reasons was a domestic arrangement, not a legally binding contract. This presumption can be rebutted, as shown in Merritt v Merritt [1970] where separated spouses were held to have intended legal relations.

Question 2

What principle was established in Hadley v Baxendale (1854) regarding contractual damages?

Accepted Answer

Damages are limited to losses arising naturally from the breach or within the contemplation of both parties

Answer

Hadley v Baxendale established the two-limb test for remoteness of damage in contract: (1) losses arising naturally from the breach in the usual course of things, and (2) losses that were within the reasonable contemplation of both parties at the time the contract was made, based on special knowledge communicated. This remains the foundational rule for contractual damages.

Question 3

What is the effect of an exclusion clause that is found to be unreasonable under the Unfair Contract Terms Act 1977?

Accepted Answer

It is void and unenforceable

Answer

Under UCTA 1977, an exclusion clause that fails the reasonableness test (s.11) is rendered void and completely unenforceable. The clause cannot be given partial effect. Section 2(2) subjects clauses excluding liability for negligence (other than death/personal injury) to the reasonableness test, while s.2(1) renders clauses excluding liability for death or personal injury caused by negligence automatically void.

Question 4

Which of the following is an equitable remedy for breach of contract?

Accepted Answer

Specific performance

Answer

Specific performance is an equitable remedy where the court orders the party in breach to perform their contractual obligations. It is a discretionary remedy, typically granted where damages would be inadequate (e.g., contracts for the sale of unique goods or land). It will not be granted where constant supervision would be required or for contracts of personal service.

Question 5

What did the court decide in Williams v Roffey Bros [1991] about practical benefit as consideration?

Accepted Answer

A practical benefit gained by the promisor can constitute good consideration for a promise of extra payment

Answer

In Williams v Roffey Bros, the Court of Appeal held that where a party to a contract promises extra payment in return for the other party performing existing contractual duties, and the promisor obtains a practical benefit (here, avoiding a penalty clause in a head contract), this can constitute good consideration. The case refined rather than overruled Stilk v Myrick (1809).

CILEx Level 3 Practice Test

CILEx Level 3 Practice Test

CILEx L3 Contract Law 2