FE-1 Contract Law 2

Question 1

What is the test for remoteness of damage in contract law following Hadley v Baxendale (1854)?

Accepted Answer

Damages are recoverable only for losses that arise naturally from the breach or that were within the reasonable contemplation of both parties at the time of contracting as probable consequences

Answer

All losses caused by the breach are recoverable regardless of foreseeability

Answer

Consequential losses are never recoverable in contract

Answer

Remoteness is determined at the time of the breach, not at contracting

Question 2

What is the doctrine of frustration in Irish contract law?

Accepted Answer

A contract is frustrated when, after formation, an event occurs without the fault of either party that renders performance radically different from what was undertaken — the contract is automatically discharged

Answer

Frustration occurs whenever performance becomes more expensive or difficult

Answer

Only the party who cannot perform can claim frustration

Answer

Frustration discharges future obligations but past payments cannot be recovered

Question 3

Under Irish contract law, what is the distinction between a condition and a warranty?

Accepted Answer

A condition is a term that goes to the root of the contract — breach entitles the innocent party to terminate and claim damages. A warranty is a less important term — breach gives a right to damages only

Answer

Conditions and warranties both give the same remedies upon breach

Answer

Warranties are more important than conditions in commercial contracts

Answer

The distinction was abolished by the Sale of Goods and Supply of Services Act 1980

Question 4

What is the rule in Pinnel's Case (1602) and how does it relate to part payment of debt in Irish law?

Accepted Answer

Payment of a lesser sum cannot be satisfaction for the whole debt — part payment of an existing debt is not good consideration for a promise to forgo the balance, though estoppel may intervene

Answer

Part payment of a debt always discharges the full debt if accepted

Answer

A creditor can never refuse part payment in Ireland

Answer

The rule in Pinnel's Case was reversed by the Statute of Limitations 1957

Question 5

What are the requirements for the remedy of specific performance in Irish equity?

Accepted Answer

The contract must be for something unique (e.g. land), damages must be inadequate, the contract must be certain, the plaintiff must have acted equitably (clean hands), and the remedy must be fair

Answer

Specific performance is available for all contract breaches as of right

Answer

Specific performance is only available in the Commercial Court

Answer

The remedy requires proof of fraudulent breach

Question 6

What is the contra proferentem rule in the interpretation of contractual exclusion clauses?

Accepted Answer

Where an exclusion clause is ambiguous, it is construed against the party who drafted it and seeks to rely upon it

Answer

Exclusion clauses are always construed in favour of the party relying on them

Answer

The rule only applies to consumer contracts, not commercial agreements

Answer

Contra proferentem requires the court to imply terms to fill gaps in exclusion clauses