ACCA LW ^Eng Syllabus B. The Law Of Obligations - Explain The Rules Relating To The Award Of Damages - Past Papers ^{3 / 4}

December 2014

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MC Question 3

In contract law, the ‘market price rule’ arises in relation to which of the following?

A Offer
B Consideration
C Remoteness
D Mitigation

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December 2014

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MC Question 9

Where a contract states the sum to be paid in the event of a breach of contract, the stated sum is known as which
of the following?

A Unliquidated damages
B Liquidated damages
C Specific damages
D Nominal damages

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December 2014

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MC Question 40

Which of the following actions is open to a party who has only partly performed work under a contract?

A Quantum meruit
B Action for the price
C Damages
D Restitution

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December 2012

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Question 2ab

In the context of the award of damages for breach of contract describe the rules relating to:

(a) remoteness of damage; (5 marks)

(b) the measure of damages. (5 marks)

(10 marks)

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June 2012

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Question 8ab

Az Ltd operates a shipbuilding business, which specialises in constructing and modifying ships to order. In 2011, the company entered into two contracts.

(a)	Az Ltd entered into an agreement with Blud to completely rebuild a ship to Blud’s specification for a total contract price of £7 million. However, just before completion, Blud informed Az Ltd that, due to the downturn in the world economy, he no longer needed the ship. Az Ltd immediately started an action against Blud for breach of contract. However, in the week before the case was to be decided in the court, Az Ltd sold the ship for the same amount of money that they would have received from Blud.

(a)

Az Ltd entered into an agreement with Blud to completely rebuild a ship to Blud’s specification for a total contract price of £7 million. However, just before completion, Blud informed Az Ltd that, due to the downturn in the world economy, he no longer needed the ship. Az Ltd immediately started an action against Blud for breach of contract. However, in the week before the case was to be decided in the court, Az Ltd sold the ship for the same amount of money that they would have received from Blud.

Required:

Advise Az Ltd whether it can claim damages from Blud, and the extent of those damages.

(b)	Az Ltd also entered into a contract to build a new ship for Cam for a total cost of £25 million. The contract terms provided that the total price was to be paid in 12 instalments and, in the event of Cam failing to make a payment, gave Az Ltd the right to terminate the agreement and claim an amount equal to 20% of the total contract price as damages. Any amount paid over the 20% was required to be returned to Cam. Cam failed to make the first instalment payment, but refused to pay the damages as set out in the agreement on the grounds that they were excessive.

(b)

Az Ltd also entered into a contract to build a new ship for Cam for a total cost of £25 million. The contract terms provided that the total price was to be paid in 12 instalments and, in the event of Cam failing to make a payment, gave Az Ltd the right to terminate the agreement and claim an amount equal to 20% of the total contract price as damages. Any amount paid over the 20% was required to be returned to Cam.

Cam failed to make the first instalment payment, but refused to pay the damages as set out in the agreement on the grounds that they were excessive.

Required:

Advise Az Ltd whether it can claim damages from Cam, and the extent of those damages.

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