Law Paper 1 Exam: Contract Law Questions and Answers

This document contains the solutions to a Law Paper 1 exam, focusing on Contract Law. Part A includes multiple-choice questions covering various aspects of contract law such as privity of contract, capacity, and terms. Part B presents answers to essay-style questions, addressing topics like breach of contract, remedies available to an aggrieved party, sales commission disputes, and fraud committed by an estate agent. The solutions analyze scenarios, provide legal reasoning, and reference relevant case law and legislation to support the answers. The document offers a comprehensive overview of contract law principles and their application in real-world scenarios, making it a valuable resource for students studying law.

RUNNING HEAD: Paper
Exam

Paper 1
Contents
Part A....................................................................................................................................................2
Part B.....................................................................................................................................................6
Answer one:.......................................................................................................................................6
Answer two:......................................................................................................................................6
Answer four:......................................................................................................................................7

Paper 2
Part A
1. The common law doctrine of privity of contract is that:
a) a contract is always private
b) only parties to a contract are entitled to be privy to its’ terms
c) only a party to the contract is entitled to the benefits of the contract and is bound by the
obligations of the contract
d) only a party to a contract can take a benefit from a contract
THE OPTION IS C.
2. A contract that is presumptively binding on a minor, includes:
a) a contract entered into by the minor’s parent
b) all contracts
c) a contract for the benefit of the minor
d) a contract financially advantageous to the minor
THE OPTION IS C.
3. A third party will be covered by an exemption from liability clause provided:
a) the contract made it clear that third parties were intended to be protected
b) the third party performed services under the contract
c) the contracting party acted as the third party’s agent and had authority to contract on
behalf of the third party
d) all of the above
THE OPTION IS A.
4. An assignee of a contract can:
a) take the benefit of a contract
b) must perform the obligations under a contract

Paper 3
c) can enforce the contract
d) all of the above
THE OPTION IS D.
5. A contract made with a mentally incapable person:
a) is always void
b) can only be set aside on the basis of incapacity by the mentally incapable person
c) is not binding
d) can only be set aside on the basis of incapacity by the capable party
THE OPTION IS C.
6. In New South Wales, a person who is not an Australian citizen:
a) is incapable of entering into a valid contract
b) can only enter into those contracts permitted by law
c) has full contractual capacity
d) is excluded by law from entering into a contract
THE OPTION IS A.
7. A person who has been convicted to death or has had a death sentence commuted to a life
sentence in New South Wales:
a) has the same common law rights as any other person
b) is incapable of bringing a civil action in court
c) cannot be convicted of any other criminal offence
d) is unlikely to enter into contracts
THE OPTION IS D.
8. A corporation has:
a) contractual capacity only if the contract is ratified by two directors
b) the same contractual capacity as a natural person

Paper 4
c) has more contractual capacity than a natural person
d) no contractual capacity in its’ own right
THE OPTION IS B.
9. An undischarged bankrupt:
a) is incapable of entering into contracts by statute
b) has contractual capacity but must disclose their bankruptcy
c) can only enter into contracts with the consent of all creditors
d) is ‘civilly dead’ and has no common law rights
THE OPTION IS A.
10. Married women:
a) can only enter into contracts with their father’s or husband’s consent
b) have no contractual capacity
c) have full contractual capacity
d) have full contractual capacity subject to ratification by their ‘responsible person’
THE OPTION IS C.
11. To receive quantum meruit as a remedy, a plaintiff must show:
a) they have calculated the value of their loss or damage correctly
b) the defendant received a benefit and it would be unjust enrichment if the defendant was
not required to pay a reasonable amount for it
c) that the defendant breached their obligations under the contract
d) that they have suffered a loss
THE OPTION IS B.
12. Parol evidence is not admissible in court:
a) in any circumstances
b) except where evidence is required to resolve ambiguity

Paper 5
c) when only affidavit evidence is allowed
d) except where the evidence varies the written agreement
THE OPTION IS D.
13. When determining whether a representation is a term of the contract, the court would
apply:
a) an objective test
b) a subjective test
c) a ‘but for’ test of causation
d) a test on balance of probabilities
THE OPTION IS A.
14. A collateral contract:
a) is unenforceable but the main contract is enforceable
b) is always implied by conduct of the parties
c) does not require consideration
d) arises when a representor intends the promise to be legally binding and the other party
relies on it to enter into the main contract
THE OPTION IS D.
15. An essential contract term:
a) could be any term of the contract
b) is a term of critical importance to the promisee
c) must be strictly complied with
d) all of the above
THE OPTION IS B.

Paper 6
Part B
Answer one:
As per facts of the problem, there is a breach of contract in conveyance by the vendor and
agent. The Emily and David are entitled to following relief:
 Anticipatory Repudiation- an innocent party is in liberty to repudiate the contract if
the agreed terms or conditions are not fulfilled by the opposite party. The rule of
anticipatory breach followed in the case 1 where purchaser was compensated due to
vendor’s fault.
 Monetary Damage- generally, court of law award monetary
damages in cases of breach of contract. The purpose of the
monetary damages is to provide a previous position to the
aggrieved party before breach of the contract2.
 Specific Performance-the present case also support the relief of “specific performance
of the contract. As per orders of the court, the vendor and agent are liable to assure the
amenities to the aggrieved purchaser3
 Injunction- the order of Injunction is another remedy to the present problem, the
injunction orders entitled defaulting party to provide an unperformed action to be
done immediately without any undue delay.
Apart from these above remedies, the David and Emily are also entitled to damages for
loss according to the failure on the performance of pre-condition on the contractual date
specified in the sale deed. Such entitlement provided in the Standard Conditions of Sale4.
Answer two:
As per facts of the problem, sales commission is a major disputed criterion. Generally, the
sales commission are negotiable. The Australian Estate Agency Board does not specify the
prescribed format of payment for any sale agent. The appropriate response to the problem is
1 Bain v Fothergill
(1874) LR 7 HL 158
2 S 54B of the Conveyancing Act 1919 (NSW)
3Dougan v Ley
[1946] HCA 3
4 Special Condition of 7.2 in the Standard Conditions of Sale (5th Edition)

Paper 7
that Sandra must see that all the essential sale condition to the contract is fulfilled or not.
However, the sale conditions are affected by the pressured and reckless behaviour of the
Mathew.
In support of the response to the present problem, the cases5 emphasis the test of “effective
cause”. According to the test specification of the “effective cause”, an estate agent is
required to provide the justification to the sale transaction.
Further, the Australian fair pay commission, no estate agent is entitled to commission beyond
the ambit of prescribed minimum wages according to the commission6. Thus, the Mathew is
not entitled to any additional commission by the Sandra as he failed to perform the duty in a
prescribed manner.
Answer four:
The appropriate response to the problem is that the estate agent has committed the fraud and
breach the “duty to disclosure” against the innocent purchaser. The purchaser is legally
entitled to damages and may sought action towards an estate agent.
In the context of present response, the sale contracts are obliged or bind with the vendor’s
duty to deliver a free or good title to the purchaser. If such basic obligation is not performed
on the behalf of the vendor, the aggrieved party is entitled to avoid or termite the contract.
Such right to rescind the contract is available under Trade Practices Act 19747. The case
Byers v Dorotea 8 held that an aggrieved party to the contract is entitled to repudiate the
contract if such contract is influenced by the element of fraud.
Moreover, as per facts of the present problem, the purchaser is entitled to repudiate such
contract which is not disclosed on true terms and conditions and rightfully may take action
against the builder of the estate who assured the “dream big project”.
5 Doyle v Mount Kidston Mining and Exploration Pty Ltd
[1984] 2 Qd R 386 and
LJ Hooker Ltd v WJ Adams Estates Pty Ltd
(1977) 138 CLR 52
6 Andrews K.Hon. (2005) ‘The Australian Fair Pay Commission’
7 s. 52 Trade Practices Act 1974 (Cth.)
8 (1986) 69ALR 715

Paper 8
In case, the purchaser opts for an option to repudiate the contact. The factor of fraud has to be
proved beyond balance of probabilities. The case is settled on the terms when it is proved;
the case referred9 held that option of rescission needs a strong evidentiary value for making it
null and void in the eyes of the law.
9 Simons & Anor v Zartom Investments Pty Ltd
[1975] 2NSWLR30).