WEEK 3 INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA TOPIC: LAW OF CONTRACT 1
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1 WEEK 3 INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA Answer the following questions: SECTION A : MULTIPLE-CHOICE QUESTIONS TOPIC: LAW OF CONTRACT 1 1. Which of the following is NOT an illegal contract at common law? A. A contract to commit a crime or tort B. An agreement to solicit for prostitutes C. A contract to obstruct the administration of justice D. A contract to supply local goods to a foreign country E. A contract with an alien enemy during the war 2. Where a party to a contract was forced to consent to the terms of a contract, such a contract is said to be A. Novel B. Fraudulent C. Binding D. Actionable per se E. Voidable 3. State the term of a contract which is fundamental and goes to the root of the contract. A. Condition B. Warranty STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 1
2 C. Foundational D. Final E. Exclusionary 4. The type of mistake which the parties to a contract make when they are mistaken about the same thing is referred to as... A. Divergent mistake B. Operational mistake C. Mutual mistake D. Common mistake E. General mistake 5. The rule of interpreting a contract document with ambiguity against the maker is known as. A. Contra proferentem rule B. Ambiguity rule C. Exceptional rule D. Wrongful interpretation rule E. Rejection rule 6. What is the legal contractual status of advertisements in newspapers offering goods and services for sale? A. Offer B. Invitation to treat C. Offer and acceptance D. Offer or acceptance E. Invitation to tender 7. Which of the following is absent in a domestic agreement? STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 2
3 A. Capacity to contract B. Intention to create legal relations C. Consideration D. Undue influence E. Duress 8. When two offers identical in terms, are sent by two parties to each other... is said to take place. A. counter offer B. passing offer C. exchanged offer D. cross offer E. concluded offer 9. When does an acceptance by post take effect? A. when the offeror receive the letter B. when the offeree post the letter. C. when the offeror approves the letter D. when the offeree exchang the letter E. when the offeree seal the letter 10. What is the effect of the death of an offeror on the offer before the offeree accepts the offer? A. offer continues B. offer is postponed C. offer elapse D. offer is approved E. offer is suspended STARRY GOLD ACADEMY , , Page 3
4 SECTION B 1. Apt Ltd is a small independent book company, which specialises in publishing modern poetry. In January 2013 it signed a contract with a new poet, called Bel, to publish her second book of poems in August In March 2013, Bel won a prestigious award for her first book of poems, which had been published privately. In the light of the fame which now attached to Bel, Apt Ltd launched an extensive advertising campaign publicizing the forthcoming book. The campaign was expensive, costing 50,000, but it was successful in generating great interest. As a result, Apt Ltd won a contract to supply a large book club with 100,000 copies of the book, which would make them a profit of 250,000. Unfortunately in May 2014, Bel informed Apt Ltd that she would not be able to supply the manuscript to it as she had signed a more rewarding contract with Cax plc, a very large publishing company. In the context of Bel s anticipatory breach of contract, explain any possible remedies open to Apt Ltd. 2. Write on the following: a. Meaning of contract b. Formal and informal contract c. Express and implied contract 3. What are the factors to be considered before a contract can be binding? 4. Explain the following: a. Condition b. Warranty 5. Write detailed note on exemption clause STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 4
5 6. Define an offer and mention ways of terminating an offer 7. What is a consideration and the rules governing consideration? 8. Define acceptance and acceptance by post 9. What are the factors that will determine that party to a contract intend to enter into a legal relation? 10. Cita Properties Limited had landed property in Victoria Island which it wanted to put to profitable commercial use. The company invited Architect Okpara to a meeting at which the development of the property for various commercial purposes was discussed. The minutes of the meeting, the feasibility study on the commercial development of the property and the survey plan of the property were subsequently sent to Architect Okpara who went ahead to prepare designs and sketch drawings which he forwarded to Cita Properties limited. This was followed by a bill for professional fees of N250,000. Cita Properties Limited has refused to pay the fees as the company contends that no offer was made to the Architect. Advise the parties. STARRY GOLD ACADEMY , , info@starrygoldacademy.com, Page 5
6 STARRY GOLD ACADEMY , , Page 6
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