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Contract — free SQE1 sample questions
164 free, worked single-best-answer questions for Contract, shown in the official SRA SBAQ format with the correct answer and a cited rationale. Drill the full bank in timed practice once you’ve worked through these.
Question 1
Aisha agrees in writing to sell her vintage car to Ben for £8,000. The signed written contract contains no reference to the original service-history folder, which Aisha keeps in a separate filing cabinet. Two days before completion Ben asks for the folder and Aisha refuses, saying it was never part of the deal. Ben sues for breach of contract, arguing the folder should be treated as an implied term of the sale. Which of the following best explains the legal position?
- A.The folder is implied as a term in fact under the officious-bystander test because, if asked at the time of contracting, both parties would obviously have agreed to its inclusion.
- B.The folder is implied as a term in law because all contracts for the sale of second-hand cars carry an implied obligation to transfer accompanying service documentation.
- C.The folder is not part of the contract; where the parties have reduced their agreement to a complete written document the court will not imply a term in fact unless it is necessary to give the contract business efficacy or passes the officious-bystander test, and on the facts neither threshold is met.✓ correct
- D.The folder is part of the contract under section 13 of the Sale of Goods Act 1979 because a vintage car sold with a service history is sold by description and the folder forms part of that description.
- E.The folder is part of the contract because Aisha is estopped from denying its inclusion having previously allowed Ben to inspect it in the filing cabinet before the contract was signed.
Why C is correct
**Why C is correct** The starting point is that where parties have committed their bargain to writing, courts are slow to supplement it by implication. A term will be implied in fact only if it satisfies *either* the **business efficacy** test (*The Moorcock* (1889) 14 PD 64) — the contract would otherwise lack commercial or practical coherence — *or* the **officious-bystander** test (*Shirlaw v Southern Foundries* [1939] 2 KB 206). The Supreme Court confirmed in *Marks & Spencer plc v BNP Paribas Securities Services* [2015] UKSC 72 that implication in fact requires the term to be **necessary**, not merely reasonable or desirable, and that the two tests are facets of a single necessity inquiry. On the facts, the contract for the sale of the car functions perfectly well without the folder: there is no gap that renders it unworkable. Neither test is therefore satisfied, and the folder remains with Aisha. **Why the other options are wrong** - **A** misapplies the officious-bystander test. The test asks whether *both* parties would have said 'of course' to the proposed term as a matter of obvious necessity (*Shirlaw*). The facts give no basis for concluding that Aisha — who kept the folder separately — would have agreed; her refusal is evidence to the contrary. A term that one party would have disputed cannot satisfy the test. - **B** invents a category of term implied in law with no foundation in authority. Terms implied in law attach to defined categories of contract (e.g., the employer's duty of mutual trust in employment contracts: *Liverpool City Council v Irwin* [1977] AC 239). There is no recognised rule that service histories are implied terms of second-hand car sales. - **D** misuses s 13 Sale of Goods Act 1979. That section provides that where goods are sold by description there is an implied term that they will correspond with the description. 'Description' for s 13 purposes goes to the **identity** of the goods (e.g., 'a 1965 Ford Mustang') not to whether accompanying documents or accessories are included. The folder is a separate chattel, not part of the description of the car itself. - **E** confuses estoppel with implied terms. Promissory estoppel (following *Central London Property Trust Ltd v High Trees House Ltd* [1947] KB 130) requires a clear and unequivocal promise or representation that legal relations will be altered, and detrimental reliance. Permitting a prospective buyer to inspect a document before contract does not amount to a representation that the document will be included in the sale, and there is no pleaded reliance or detriment on these facts.
Question 2
A woman offers to sell her vintage car to a collector for £15,000. The collector posts a letter accepting the offer on Monday at 2pm. On Tuesday at 10am, before the letter arrives, the woman emails the collector withdrawing her offer. The collector's letter arrives at the woman's home on Tuesday at 3pm. Is there a binding contract?
- A.Yes, because acceptance was effective when the collector posted the letter on Monday.✓ correct
- B.Yes, because the woman's email revocation was not communicated in the same manner as the original offer.
- C.No, because the woman effectively revoked her offer before the acceptance arrived.
- D.No, because acceptance must be actually communicated to the offeror to be valid.
- E.No, because revocation by a faster means of communication takes priority over postal acceptance.
Why A is correct
The postal rule applies: acceptance is complete when posted, not when received (*Adams v Lindsell* (1818) 106 ER 250). The collector's acceptance became effective on Monday at 2pm when posted. Revocation must be communicated before acceptance is complete (*Byrne v Van Tienhoven* (1880) 5 CPD 344). Since acceptance was already effective on Monday, the Tuesday revocation came too late. Option D incorrectly assumes the postal rule does not apply. The postal rule remains good law where post is an appropriate or contemplated means of acceptance.
Question 3
A builder agrees to renovate a homeowner's kitchen for £8,000. The written contract states 'all work to be completed using materials of satisfactory quality'. After completion, the homeowner discovers the builder used cheaper tiles than a reasonable person would regard as satisfactory given the contract price and context, though the tiles function adequately for their basic purpose. Can the homeowner claim damages for breach of contract?
- A.Yes, because the tiles breach the express term requiring satisfactory quality; satisfactory quality is assessed by reference to all relevant circumstances including price and appearance, not merely functional adequacy.✓ correct
- B.Yes, because an implied term under the Supply of Goods and Services Act 1982 automatically requires the builder to use industry-standard materials regardless of what the contract states.
- C.No, because satisfactory quality in a building contract means only that the materials must function adequately for their basic purpose, and the tiles meet that threshold.
- D.No, because the homeowner cannot rely on the express term having accepted the completed works without objection at the time of handover.
- E.No, because the homeowner failed to specify the exact grade or brand of tiles required in the written contract, so the builder had an unfettered discretion as to the materials used.
Why A is correct
**Correct answer: A** **The express term and the standard of 'satisfactory quality'** The contract contains an express term requiring materials of 'satisfactory quality'. The phrase 'satisfactory quality' is well-understood in English law. Under the Sale of Goods Act 1979 s.14(2A)–(2B) (applicable to goods) and the Supply of Goods and Services Act 1982 s.4 (applicable to goods transferred under a contract for work and materials), goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of **all relevant circumstances including price, description, and any other relevant factor** — not merely whether they function at a basic level. Appearance and finish are explicitly listed as quality aspects under s.14(2B) SGA 1979 (incorporated by analogy into service contracts with materials). Even where parties use the phrase in an express term, the same multi-factorial assessment applies. On the facts, the tiles, though functional, fall below what a reasonable person would regard as satisfactory given an £8,000 contract price. The homeowner can therefore claim damages representing the difference in value or the cost of cure (*Ruxley Electronics and Construction Ltd v Forsyth* [1996] AC 344 — damages for breach in building contracts may be the diminution in value or, where reasonable, the cost of reinstatement). **Why the other options are wrong** - **B** is wrong in its reasoning. The Supply of Goods and Services Act 1982 s.4 does imply a satisfactory-quality term into contracts for the transfer of goods, but on these facts there is already an *express* term to that effect. The claim succeeds on the express term. More importantly, the 1982 Act does not impose a free-standing 'industry-standard materials' obligation independently of the satisfactory quality standard. - **C** incorrectly conflates satisfactory quality with mere fitness for purpose. Fitness for purpose (SGA 1979 s.14(3); 1982 Act s.4(5)) is a *separate* implied term. Satisfactory quality is broader and encompasses appearance, finish, and durability as well as functionality. - **D** is wrong as a matter of law. Acceptance of completed works may affect remedies (e.g., precluding rejection and treating the contract as discharged) but it does not extinguish a claim in damages for breach of contract. The right to damages survives acceptance: *Hoenig v Isaacs* [1952] 2 All ER 176. - **E** is wrong because the express term 'satisfactory quality' itself sets an objective standard assessed by reference to all the circumstances. The homeowner is not required to specify a particular tile grade; the term places the obligation on the builder to select materials that meet the standard.
Question 4
A software company emails a potential client offering to build a bespoke application for £50,000, stating 'this offer remains open until 5pm on Friday'. On Thursday, the client learns from a mutual business contact that the software company has sold its entire development team to a competitor. On Friday at 2pm, the client emails acceptance. Is there a binding contract?
- A.Yes, because the offer was accepted before 5pm on Friday and the promise to keep it open until that time was binding on the offeror.
- B.Yes, because indirect communication from a third party cannot constitute effective revocation of an offer.
- C.No, because the offer had been effectively revoked: the client learned from a reliable third-party source of conduct by the offeror wholly inconsistent with a continuing intention to be bound, before the client purported to accept.✓ correct
- D.No, because the offer lapsed automatically by operation of law the moment the software company sold its development team, without any communication to the client being required.
- E.No, because a promise to keep an offer open until a stated time is unenforceable without separate consideration, so the offer could be revoked at any point before acceptance regardless of the circumstances.
Why C is correct
**Dickinson v Dodds** (1876) 2 Ch D 463 (CA) is the controlling authority. The Court of Appeal held that an offer can be effectively revoked before the stated deadline if, prior to acceptance, the offeree learns from a **reliable source** that the offeror has acted in a manner **wholly inconsistent** with a continuing intention to contract. In *Dickinson v Dodds* itself, the offeree learned from a third party that the offeror had sold the property to someone else; that indirect communication was held to constitute good revocation. On the facts here, the client—before accepting—learned from a mutual business contact that the software company had sold its entire development team. That information, from a plausible and reliable source, conveyed conduct squarely inconsistent with the offeror's ability or intention to perform. The purported acceptance on Friday was therefore too late. **Why the other options are wrong:** - **A** is wrong because, under *Dickinson v Dodds*, a bare promise to keep an offer open (a 'firm offer') is not irrevocable at common law; it is not binding without consideration—and even if it were, revocation had already occurred indirectly before acceptance. - **B** is wrong: *Dickinson v Dodds* expressly establishes that indirect communication *can* constitute effective revocation where it comes from a reliable source. The offeree need not receive revocation from the offeror personally. - **D** is wrong because lapse of an offer by supervening incapacity or impossibility is a distinct doctrine and does not operate instantaneously or automatically without the offeree having notice of the relevant facts; moreover, selling a development team does not self-evidently make performance legally impossible. - **E** states a correct general principle (confirmed in *Routledge v Grant* (1828) 4 Bing 653 and affirmed in *Dickinson v Dodds*) but leads to the wrong conclusion on these facts. The reason the acceptance fails here is not the abstract unenforceability of the promise to keep the offer open; it is the concrete fact that revocation was communicated indirectly to the offeree before acceptance. Option E also overstates the rule by implying consideration is the *only* relevant issue.
Question 5
A retailer orders 1,000 units from a manufacturer. The manufacturer's standard terms include a limitation clause capping liability at the contract price. During negotiations, the retailer's director said 'we need a guarantee you'll deliver on time as we have penalties from our customer'. The manufacturer replied 'don't worry, we always deliver on time'. Late delivery costs the retailer £40,000 in penalties. The contract price is £10,000. What is the likely status of the limitation clause?
- A.The clause is automatically enforceable because both parties are businesses and freedom of contract prevails without restriction in commercial dealings.
- B.The clause is void because the manufacturer's oral assurance during negotiations constitutes a misrepresentation that automatically nullifies any inconsistent written term.
- C.The clause is subject to the requirement of reasonableness under s.3 of the Unfair Contract Terms Act 1977, because the retailer dealt on the manufacturer's written standard terms of business.✓ correct
- D.The clause is unenforceable under the Consumer Rights Act 2015 because standard terms that limit liability must satisfy a fairness test in all contracts.
- E.The clause is unenforceable because a limitation clause can never cap liability below the actual loss suffered by the innocent party in a business-to-business contract.
Why C is correct
**Correct answer: C** **Why C is correct:** This is a business-to-business (B2B) contract, so the **Unfair Contract Terms Act 1977 (UCTA)** applies, not the Consumer Rights Act 2015 (which is confined to consumer contracts). Under **s.3 UCTA 1977**, where one party deals on the other's *written standard terms of business*, any term purporting to restrict or limit liability for breach is subject to the **requirement of reasonableness** under **s.11 UCTA** and the **Schedule 2 guidelines**. The facts state the manufacturer's *standard terms* were used, squarely engaging s.3. The court would weigh factors such as the parties' bargaining strength, whether the retailer received an inducement, the retailer's ability to insure, and crucially the oral assurance that timely delivery was guaranteed — all relevant Schedule 2 factors. A cap of £10,000 against a £40,000 loss would face serious scrutiny but must be assessed rather than automatically voided. **Why the others are wrong:** - **A** is wrong: freedom of contract in B2B dealings is qualified by UCTA 1977; s.3 expressly subjects standard-term limitation clauses to a reasonableness test. - **B** is wrong: the manufacturer's statement ('we always deliver on time') may amount to a collateral warranty or be relevant to reasonableness, but it does not *automatically* void an inconsistent written term. A collateral warranty claim would need to satisfy contractual formation requirements, and even then the written clause would be assessed for reasonableness rather than treated as nullified. - **D** is wrong: the **Consumer Rights Act 2015** applies only where one party is a *consumer* (s.2 CRA 2015). The retailer is a business, so CRA 2015 does not apply. - **E** is wrong: there is no rule of law that a limitation clause can never cap liability below actual loss in B2B contracts. Such clauses are commonplace and enforceable if they satisfy the s.11 reasonableness test. **Key authority:** *Unfair Contract Terms Act 1977*, ss.3, 11 and Schedule 2; *Stewart Gill Ltd v Horatio Myer & Co Ltd* [1992] QB 600 (CA) (on standard terms); *George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd* [1983] 2 AC 803 (HL) (on reasonableness assessment).