SQE1 Contract Law 2 — Questions and Answers
Question 1: Under the Consumer Rights Act 2015, what is the implied term regarding the quality of goods sold by a trader to a consumer?
- Goods must be of satisfactory quality (Correct answer)
- Goods must be perfect in all respects
- Goods must match only their written description
- Quality is at the trader's discretion
Correct answer: Goods must be of satisfactory quality
Section 9 of the Consumer Rights Act 2015 implies a term that goods must be of satisfactory quality — meaning the standard a reasonable person would consider satisfactory given the description, price, and all other relevant circumstances.
Question 2: What is the legal position when a party claims frustration of a contract?
- All obligations are suspended until the frustrating event passes
- The contract is automatically void from the moment of the frustrating event, and parties are discharged from future obligations (Correct answer)
- The party claiming frustration must pay the other party all anticipated profits
- Frustration can only be claimed with three months' notice
Correct answer: The contract is automatically void from the moment of the frustrating event, and parties are discharged from future obligations
Under the doctrine of frustration, when a supervening event occurs that was not foreseeable, makes performance impossible or radically different, and was not self-induced, the contract is automatically void from that point and parties are discharged from future obligations.
Question 3: What does the law mean by 'privity of contract'?
- Contracts must be kept confidential between the parties
- Only parties to a contract can sue or be sued on it (Correct answer)
- Contracts must be signed in private
- All terms must be expressly stated in writing
Correct answer: Only parties to a contract can sue or be sued on it
The doctrine of privity of contract (Dunlop Pneumatic Tyre Co v Selfridge [1915]) holds that only parties to a contract can acquire rights or obligations under it. Third parties cannot sue on a contract. However, the Contracts (Rights of Third Parties) Act 1999 provides an exception.
Question 4: Under the Contracts (Rights of Third Parties) Act 1999, when can a third party enforce a contractual term?
- Always, if they benefit from the contract
- When the contract expressly provides for it, or the term purports to confer a benefit on them and the parties intended the term to be enforceable by them (Correct answer)
- Only when both original parties agree to allow enforcement
- Only in contracts for the sale of goods
Correct answer: When the contract expressly provides for it, or the term purports to confer a benefit on them and the parties intended the term to be enforceable by them
Under the Contracts (Rights of Third Parties) Act 1999, a third party can enforce a contractual term if: (a) the contract expressly provides they may do so, or (b) the term purports to confer a benefit on them, unless it appears the parties did not intend the term to be enforceable by the third party.
Question 5: Which remedy for breach of contract requires the breaching party to perform their contractual obligations?
- Damages
- Rescission
- Specific performance (Correct answer)
- Account of profits
Correct answer: Specific performance
Specific performance is an equitable remedy that orders the breaching party to perform their contractual obligations. It is typically granted for contracts involving unique goods or land, and is discretionary (not available as of right).
Question 6: A clause in a commercial contract excludes all liability for negligence. Under the Unfair Contract Terms Act 1977 (UCTA), such a clause between two businesses is:
- Always void and unenforceable
- Valid only if it satisfies the reasonableness test (Correct answer)
- Always valid between commercial parties
- Valid only if agreed by a court in advance
Correct answer: Valid only if it satisfies the reasonableness test
Under UCTA 1977 (s.2(2)), a clause excluding liability for negligence causing loss other than death or personal injury between business parties is valid only if it satisfies the reasonableness test. Exclusion of liability for death or personal injury caused by negligence is always void (s.2(1)).
SQE1 Contract Law 2
Under the Consumer Rights Act 2015, what is the implied term regarding the quality of goods sold by a trader to a consumer?