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Contract Law Examination Paper: Unit 2 – Contract Law, Exams of Contract Law

An examination paper for the CILEx Level 3 Professional Qualifications and Level 3 Legal Services Knowledge Qualifications Unit 2 – Contract Law. The paper consists of instructions for candidates, Section A with five multiple-choice questions, and Section B with scenarios for answering specific contract law questions. topics such as unilateral contracts, past consideration, intention to create legal relations, written terms, frustration of contracts, and misrepresentations.

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164691 Page 1 of 12
15 January 2018
Level 3
CONTRACT LAW
Subject Code L3-2
THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES
UNIT 2 – CONTRACT LAW*
Time allowed: 1 hour and 30 minutes plus 15 minutes’ reading time
Instructions to Candidates
You have FIFTEEN minutes to read through this question paper before the start of
the examination.
It is strongly recommended that you use the reading time to read this
question paper fully. However, you may make notes on this question paper or in
your answer booklet during this time, if you wish.
This question paper is divided into TWO sections. You must answer ALL the
questions from Section A. There are three scenarios in Section B. You must
answer the questions relating to ONE of the scenarios from Section B ONLY.
Write in full sentences – a yes or no answer will earn no marks.
Candidates must comply with the CILEx Examination Regulations.
Full reasoning must be shown in answers. Statutory authorities, decided cases and
examples should be used where appropriate.
Information for Candidates
The mark allocation for each question and part-question is given and you are advised
to take this into account in planning your work.
Write in blue or black ink or ballpoint pen.
Attention should be paid to clear, neat handwriting and tidy alterations.
Complete all rough work in your answer booklet. Cross through any work you do not
want marked.
Do not turn over this page until instructed by the Invigilator.
* This unit is a component of the CILEx LEVEL 3 PROFESSIONAL QUALIFICATIONS and LEVEL 3 LEGAL
SERVICES KNOWLEDGE QUALIFICATIONS
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164691

Page 1 of 12

15 January 2018 Level 3 CONTRACT LAW Subject Code L3-

THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

UNIT 2 – CONTRACT LAW *

Time allowed: 1 hour and 30 minutes plus 15 minutes’ reading time

Instructions to Candidates

ƒ You have FIFTEEN minutes to read through this question paper before the start of the examination.

ƒ It is strongly recommended that you use the reading time to read this question paper fully. However, you may make notes on this question paper or in your answer booklet during this time, if you wish.

ƒ This question paper is divided into TWO sections. You must answer ALL the questions from Section A. There are three scenarios in Section B. You must answer the questions relating to ONE of the scenarios from Section B ONLY.

ƒ Write in full sentences – a yes or no answer will earn no marks.

ƒ Candidates must comply with the CILEx Examination Regulations.

ƒ Full reasoning must be shown in answers. Statutory authorities, decided cases and examples should be used where appropriate.

Information for Candidates

ƒ The mark allocation for each question and part-question is given and you are advised to take this into account in planning your work.

ƒ Write in blue or black ink or ballpoint pen.

ƒ Attention should be paid to clear, neat handwriting and tidy alterations.

ƒ Complete all rough work in your answer booklet. Cross through any work you do not want marked.

Do not turn over this page until instructed by the Invigilator.

***** (^) This unit is a component of the CILEx LEVEL 3 PROFESSIONAL QUALIFICATIONS and LEVEL 3 LEGAL

SERVICES KNOWLEDGE QUALIFICATIONS

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SECTION B

(There are three scenarios in Section B. Answer the questions relating to ONE of the scenarios ONLY)

Scenario 1

Damini runs a wholesale gloves business, making gloves and selling them to shops.

In August 2017, Damini sent a quotation to Farhat, who owns a clothing shop, for 500 pairs of men’s brown gloves, at a price of £3.00 per pair, delivery 1 November. In the accompanying letter, she stated, ‘I have to sell these and, as you are my best customer, I will assume them sold to you unless I hear from you by the end of next week’. Farhat did not respond to this letter, as she was already over-stocked with men’s brown gloves.

Two weeks later, Damini received an email from Farhat asking whether she would be prepared to supply 1,000 women’s medium blue leather gloves for delivery on 1 December.

Damini replied, sending a quotation of £5.00 per pair, subject to her standard terms and conditions. These included a price variation clause providing for the price to be increased by £1.00 per pair if the cost of leather increased between the placing of the order and delivery of the gloves.

Farhat responded by sending Damini an order form for the gloves at £5.00 per pair. Farhat’s order form contained terms and conditions with no price variation clause. The order form had a tear-off slip for acknowledging the terms of the order. Damini signed and returned the tear-off slip to Farhat.

To enable her to manufacture the gloves, Damini decided to get her glove- making machine serviced. She entered into a personal contract with Robert to service it at a cost of £400, £100 to be paid a week in advance, and £300 to be paid on completion of the servicing. Robert spent £60 preparing his tools to carry out the service. Unfortunately, Robert had a serious car accident the day before he was due to service the glove-making machine and was not able to carry out the work. Damini had not paid any sums under the contract.

Damini found someone else to service the machine. She has now sent two invoices to Farhat, one for £1,500 for the men’s brown gloves, and one for £6,000 for the women’s medium blue gloves because of increases in the cost of leather.

Scenario 1 Questions

  1. (a) Define an offer. (3 marks)

(b) Identify three features of Damini’s quotation for the men’s brown gloves which show it to be an offer. (3 marks)

(c) Explain whether Farhat has entered into a binding contract to buy the men’s brown gloves. (4 marks) (Total: 10 marks)

  1. (a) Explain what is meant by the ‘battle of the forms’. (4 marks)

(b) Explain whether there is a contract between Damini and Farhat for the women’s blue gloves, and, if so, what price Farhat must pay for them.

(8 marks) (Total: 12 marks)

  1. (a) Define what is meant by frustration of a contract. (4 marks)

(b) Explain whether the contract between Damini and Robert has been frustrated. (4 marks) (Total: 8 marks)

  1. Assuming the contract between Damini and Robert to have been frustrated, explain whether:

(a) Damini has to pay Robert the final £300; (3 marks)

(b) Damini has to pay Robert any or all of the £100 payable in advance.

(7 marks) (Total: 10 marks)

(Total Marks for Scenario 1: 40 marks)

Turn over

Scenario 2 Questions

  1. (a) Define misrepresentation. (3 marks)

(b) Explain whether Gemma’s statement that the business was being put up for auction the following week was a misrepresentation.

(4 marks) (Total: 7 marks)

  1. Assume for the purposes of this question that Gemma’s statement about the auction is a misrepresentation:

(a) explain what type of misrepresentation it is; (7 marks)

(b) explain the remedies available to Angus for that misrepresentation.

(6 marks) (Total: 13 marks)

  1. (a) Identify four factors which are considered by the courts in distinguishing a representation from a term of a contract. (4 marks)

(b) Explain whether the statement that ‘Profits averaging £30,000 per annum over the last three years’ is a term of the contract between Gemma and Angus. (5 marks) (Total: 9 marks)

  1. (a) Identify two circumstances in which silence may amount to a misrepresentation. (2 marks)

(b) Explain whether Gemma’s omission to tell Angus about the lack of parking facilities is a misrepresentation. (3 marks) (Total: 5 marks)

  1. (a) Explain how a term may be implied by the courts on the particular facts of a case. (3 marks)

(b) Explain whether a term that the business would have parking facilities will be implied in this way into the contract between Gemma and Angus. (3 marks) (Total: 6 marks)

(Total Marks for Scenario 2: 40 marks)

Turn over

Scenario 3

Roopha Ltd (‘Roopha’) is a company which maintains and repairs roofing and guttering. It recently entered into three contracts with householders in Douglas Crescent.

Mrs Ali agreed with Roopha to replace her guttering. The price agreed was £500, with the work to be completed by 30 November. Unfortunately, because of difficulty in sourcing parts, Roopha later told Mrs Ali that it would only be able to complete the work by 30 November if Mrs Ali paid an extra £100 to have the parts transported from a German supplier; otherwise the work could not be completed until mid-December. Mrs Ali was very keen to have the work finished before her daughter’s wedding, so she agreed to pay the extra £100.

Mr Daffeh agreed with Roopha to retile the roof of his bungalow. The agreed price was £2,000, with payment to be made on completion of the work. Roopha completed the work on time, and requested payment. Unfortunately, Mr Daffeh had recently lost his job, and explained to Roopha that he could only afford to pay £1,000. Roopha could not reach any settlement with Mr Daffeh. Mr Daffeh’s neice, Tara, concerned that Roopha might take her uncle to court, offered to settle the account for £1,500 herself if Roopha agreed to forgo the remaining £500. Roopha accepted Tara’s proposal and Tara paid the £1,500.

Ms Martin agreed with Roopha to reset a number of ridge tiles which had become loose and which were causing her roof to leak. Unfortunately, the work carried out by Roopha was inadequate. Ms Martin’s roof continued to leak, and, as a result, her bedroom ceiling has suffered water damage which will cost her £ to repair.

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