Question 1 Answer all questions below. Do not write more than 20 words on each part of the question. Note form answers are acceptable.
1. List any 5 illegal contracts strictly so called.
Commit a crime, a tort or a fraud on a third party; are sexually immoral; are prejudicial to the public safety; are prejudicial to the administration of justice; tend to promote corruption in public life; are designed to defraud the revenue; are prohibited by statute; tend to defraud or deceive a third party.
2. Name 3 ways in which an offer of a contract will expire.
By revocation of the offeror; By rejection of the offeree; By lapse of time of the offer.
3. What is meant by past consideration?
An act as consideration was performed before any promise of reward is called past consideration; It is not a valid consideration.
4. What is meant by implied terms of a contract?
Terms which are not expressly set out in contract; But which are implied in fact or law or by custom.
5. Name the types of actionable misrepresentation.
Fraudulent misrepresentation; Innocent or negligent misrepresentation.
6. Name 2 equitable remedies at time of breach of contract by one party.
Specific performance; Injunction.
7. What is an inchoate instrument?
An negotiable instrument which does not contain one or more elements required by law to constitute it.
8. Who is the drawee of a cheque?
A bank.
9. What type of indorsement is the following? "Pay John on his delivery of documents of title to Hong Kong Bank. Signed: Wang"
Conditional indorsement.
10. Is "indirect injury" a nuisance or trespass?
A nuisance.
SECTION TWO Answer any four questions only. Each question carries equal marks. Note form answers are acceptable.
Question 2 Answer all questions below. Read the following statements, state whether they am True (T) or False (F). If it is a false statement, try to rewrite a correct version to illustrate your answers.
1. A prohibitory injunction orders the defendant to do something positive.
对 错
B
A prohibitory injunction stops the defendant to do something positive.
2. The employer is vicariously liable for a tort committed by the employee acting in a course of employment.
对 错
A
3. A person can exclude or restrict his liability for personal injury resulting from negligence by express consent.
对 错
B
A person can not exclude or restrict his liability for personal injury resulting from negligence by express consent.
4. Personal property consists of all movable property except property recoverable and /or enforceable by taking an action.
对 错
B
Personal property consists of all movable property includingproperty recoverable and /or enforceable by taking an action.
5. The mortgagor may, where he is in possession of the land, grant leases to third parties subject to any special agreement to the contrary.
对 错
A
6. The most extensive right allowed by the law of dealing with a thing to the exclusion of all others is called possession.
对 错
B
The most extensive right allowed by the law of dealing with a thing to the exclusion of all others is called ownership.
7. An indorser may negative or limit his liability of repayment to the holder by an express insertion to that effect.
对 错
A
8. A drawee of a bill of exchange has an obligation to pay the bill.
对 错
B
A drawee of a bill of exchange has an obligation to pay the bill only when he becomes an acceptor. No person is liable to a bill if he has not signed it.
9. Certificates of deposits are not negotiable instruments.
对 错
B
Certificates of deposits are negotiable instruments, providing they are in a deliverable state.
10. A bill of exchange which is drawn in favour of a fictitious or non-existing person is not valid.
对 错
B
A bill of exchange which is drawn in favour of a fictitious or non-existing person is still valid, it may be, treated as payable to bearer.
11. A cheque which reads "Pay cash" is a valid cheque.
对 错
B
A cheque which reads "Pay cash" is not a valid cheque.
12. Minors are generally fully liable for their tortious actions.
对 错
A
Question 3
1. (a)Define a promissory note. (b)State whether each of the following negotiable instruments is valid. (i) A bill reads "pay $1,000 out of money to be received by you from Mr. Gao". (ii) A bill of exchange reads "pay $10,000, charge the same to the sale proceeds of 100 cartons of toys shipped per SS Mingzen". (iii) A bill of exchange which is stated as being payable on arrival of goods at a specified port. (iv) Is a bill of exchange which is payable on a person's marriage valid? (v) A bill of exchange is drawn in favour of a minor, a person below the age of eighteen. (vi) A bill of exchange reads "we hereby request you to pay on our account to the order of Gao$1,000". (vii) A bill of exchange reads "pay to our order the sum of $5,000 in accordance with your undertaking authorized through Bank of Hongkong". (viii) Is a cheque which reads "pay order" valid? (ix) A promissory note reads "I promise to pay on or before Dec 1st, 1998 Mr. Gao or order the sum of $10,000 only for value received. Signed". (x) Is a promissory note which reads "to be paid back in full by 1 July, 1988" valid?
(a) A promissory note is defined as an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer. (b) (i) Not valid (ii) Valid (iii) Not valid (iv) Not valid (v) Valid (vi) Not valid (vii) Not valid (viii) Valid (ix) Valid (x) Not valid
Quesiton 4
1. Peter wants to buy a comer store. When negotiating in January, he was told by David, the owner of the store that the business of the store was very good and the average net profit from the store was$100,000 per month for the last year. However, in March, a supermarket opened near the store and the business at the store became very slow. Then a contract for the sale of the store was signed between them, all the time David didn't mention anything to Peter. Could Peter make a claim against David for misrepresentation. Advise Peter supported by cases.
There are the factors that affect the validity of a contract, misrepresentation is one of them. A representation made by one party to another to induce him to enter a contract must be a positive and true statement of some existing facts or past events, otherwise, it shall constitute a misrepresentation, which is misleading and induces other to enter into the contract, and may amount to invalidity of the contract. In With v.O'Flanagan (1936), where the defendant, who wished to sell his practice, informed the plaintiff that the income from the practice was £2,000. Five months later when the contract was signed the income had fallen considerably due to the defendant's illness and no mention of this fact was made to the plaintiff. The plaintiff claimed rescission of the contract. It was held that he could not rescind as there was misrepresentation. In Gordon v.Selico Co. Ltd.(1986), where a flat in a building which had been converted by a developer was taken by the plaintiff on a 99-year lease. Soon after he moved in, dry ret was discovered. It was held that deliberate concealment of the dry rot by the developer could amount to fraudulent misrepresentation, therefore, damages were awarded to the plaintiff. It's a general rule that mere silence does not normally amount to representation as well as misrepresentation, except in the case where a statement, true when it is made, subsequently becomes false before the conclusion of the contract. Here the prior representation concerning the income of the store stated by David has become untrue at the time the contract was signed, due to the opening of the supermarket. David, therefore, take the obligation to correct his former representation, and the silence here amounts to misrepresentation. Peter was induced by and relied on the misrepresentation and entered into the contract, thus he could make a claim against David for misrepresentation.
Question 5
1. In January, 1992, Wang rented a house for three years at a monthly rent of $1,000. Wang became unemployed in August, 1992 and wanted to move out. Jone then orally agreed to reduce the monthly rent to half. In January, 1993 Wang was informed to pay the amount of rent he had paid before. Could Wang insist on paying the half rent until expiration of the contract? Give reasons for your answer.
It is a general rule in common law that a contractural promise is may legally binding if it is made in return for another promise or an act. Otherwise, the promisor shall not be bound by his promise. Aiming to prevent unfair consequence due to withdrawing of the promise by promisor at some situations, the doctrine of equitable estoppel or promissory was developed: a promise made by the promisor intended to create legal relations and to be acted upon by the promisee, may be enforced by the promisee, despite that he gave no consideration for it, if in fact he relied upon it to his detriment. The promisor is prevented (estopped) from denying his promise. The court applies this doctrine only when the following has been proved: (i) he has altered his position by relying on the promise; and (ii) his former position cannot be resumed. In Hirachand Punamchand v. Temple (1911), where the defendant was indebted to the plaintiff moneylenders. His father wrote to them offering to pay part of his son's debt in satisfaction of the whole, and enclosing a cheque for the sum offered. The plaintiff cashed the cheque, then sued the son for the balance. It was held that their claim failed, they must be deemed to have accepted the cheque in full satisfaction. (Other cases like: Central London Property Trust Ltd. v. High House Ltd., 1947; Ajayi v. Briscoe Ltd. 1964 are also accepted) If we apply these principles to this problem, Wang had altered his position, not moving out by paying a sum of remedy for termination of their contract but to keep it due to relying on Jone's promise of reducing to half of the rent, and this situation could not be resumed. Therefore, applying consideration hero would be unfair to Wang. Wang could apply for equitable remedy of the doctrine of estoppel, and only pay the half rent until the expiration of the contract.
Question 6
1. Define an indorsement of bill of exchange. What are the types of liability of an indorser?
Indorsement is a signature, must be the same with the transferor's name as stated in the bill in order to operate as a negotiation, must comply with the following conditions, namely: (1) it must be written on the bill itself and signed by the indorser, the simple signature of the indorser on the bill without additional words, is sufficient; (2) it must be an indorsement of the entire bill. There are four types of indorsement: (i) a blank indorsement, which, no transferee is specified; (ii) a special indorsement, which spells out the name of transferee; (iii) a restrictive indorsement, which will prevent further negotiation of the bill; (iv) a conditional indorsement, which transfers ownership subject to a specified term or condition.
Question 7
1. Write short notes on: (a) vicarious liability; (b) negligence.
(a) Vicarious liability is liability for the tort of another. The most common situation for vicarious is that the company should be responsible for behaviors or actions of the employee or servant in the course of his/her employment. It is a type of strict liability, i.e. once the elements of the relationship have been established, the person to whom vicarious liability is fixed cannot avoid liability, by showing a complete absence of negligence on that person's part, or by establishing any defence. (b) Negligence is an independent and specific tort which measures behaviour against an objective standard, involves a "triple concept". To establish negligence, the plaintiff must prove that: The defendant owed him a legal duty of care; the defendant was in a breach of that duty; and he has suffered damages as a result of that breach.
Question 8
1. Briefly explain the following four ways that personal property may be used as security for debts: a. Lien b. Mortgage c. Pledge d. Charge
(a) Lien arises when one person is given a possessory fight or interest over someone else's property. Common examples are the unpaid seller or an unpaid repairer to keep the goods until payment. (b) Mortgage is a security under which the debtor normally retain possession of his goods, but transfers their ownership to the creditor as security for the debtor. (c) Pledge is precisely opposite to that of mortgage, when the creditor acquires possession of the goods, but the debtor remains as the owner. (d) A charge is "an agreement, express or implied, whereby property is to be answerable for the payment of some debt", under which the chargee can not take the property in his own possession but can have it seized by the court bailiff.