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NEW QUESTION 40
Molly is a wedding planner who has just set up as a sole-trader. She has a meeting with a po-tential couple to organise their wedding. The couple is extremely risk adverse and have asked Molly to email them a copy of her insurances. Which insurances should Molly send? Select TWO

  • A. Public Liability Insurance
  • B. Professional Indemnity Insurance
  • C. Products Liability Insurance
  • D. Employers Liability Insurance

Answer: A,B

Explanation:
The correct answers are indemnity insurance and public liability insurance. Molly doesn’t have any products so this wouldn’t be required- she’s a consultant. As a sole-trader she doesn’t have employees so doesn’t need Employer’s Liability Insurance. The book does not go into much detail about types of insurances – but this is a known exam topic. So if you aren’t confident on these four types of insurance and when you’d expect a supplier to have them – do some extra research before the exam. Insurance types are briefly mentioned on p. 25

 

NEW QUESTION 41
John is a chocolatier and has a big order of Easter Eggs coming up in April. He also creates chocolates to sell all year round in his shop, but Easter Eggs represent a large proportion of his profits each year. John’s chocolate making machine has just broken and he has ordered a new one to be delivered in February. However due to a delay, the manufacturer of the new machine can’t deliver until May. What course of action can John take?

  • A. John can claim for loss of his regular earnings but not for the easter eggs
  • B. John cannot claim for any loss as these are in the future and he doesn’t know what these would be
  • C. John can claim for both the loss of the Easter Eggs and his regular earnings
  • D. John can claim for the loss of the Easter Eggs but not his regular earnings

Answer: C

Explanation:
3 is the correct answer. This question is testing your understanding of ‘consequential loss’ which is explained on p.109. Consequential loss is where you can claim damages for incidental loss (loss that isn’t a direct cause of the breach of the contract, such as future earnings). In this scenario the breach is the late delivery and the incidental damage is John not being able to sell any chocolate in his shop or make his Easter Eggs. There are questions like this in the real exam- remember to think what the textbook would say and don’t overthink this. The scenario doesn’t always give you a lot of information (for example this doesn’t say if there is a contract in place) so think- which of these four options is the most logical and what is this question trying to test me on.

 

NEW QUESTION 42
Sarah is a baker and orders free-range eggs from a local supplier which she uses to make cakes. There is a contract in place which included a specification that states that the eggs must be free-range. One day the supplier delivers eggs which Sarah uses in the cakes. Later she dis-covered that these were not free-range. Sarah believes that the supplier has broken the con-tract. Is this true?

  • A. no- the specification is not a contract document
  • B. no – there has been a breach in a warranty
  • C. Yes- this is a breach of a condition
  • D. Yes- this is a fundamental breach

Answer: B

Explanation:
“No- there has been a breach in warranty” is the correct answer. The key to answering this question lies in the fact that the specification in this example is a warranty rather than a condition of the contract. P.45 of the study guide explains that the Sale of Goods Act has implications on whether or not a specification is a condition, warranty or innominate term and it’s all about whether the product is in ‘good condition’ and can be used for its intended purpose. In this example the eggs were used for their intended purpose and were in good condition (or Sarah wouldn’t have put them in the cakes). Therefore in this example, the eggs needing to be free-range is a warranty of the contract not a condition. Therefore options A and B are both wrong. Answer C is also wrong because the question mentioned that the specification was included in the contract. If you want to know more about the implication of the Sale of Goods act on specifications see p.45.

 

NEW QUESTION 43
Which of these statements about Guarantees are TRUE? Select 2

  • A. A guarantor’s responsibility is higher than the Principle
  • B. A guarantor’s responsibility cannot be higher than the Principle
  • C. A Guarantee is a secondary obligation of a contract
  • D. A guarantee is a promise to repair or replace an item within a defined period of time

Answer: B,C

Explanation:
“A Guarantee is a secondary obligation of a contract’ and ‘A guarantor’s responsibility cannot be higher than the Principle’ are the correct answers. Guarantees are explained on p.28. Be careful not to confuse this with Warranty. A promise to repair or replace an item within a defined period of time is the definition of a warranty. That was put in there to trick you. Sorry. Remember a Guaran-tee is to do something when the Principle of the contract fails to do it. It’s most common in leasing agreements- if you’re a young person, you’ll often need a responsible adult / parent to sign the lease as your Guarantor. As a Guarantor, they promise to pay the rent if you’re unable to. Legally they can’t be asked to do any more than you are assigned to do in the contract. So if your rent is £500 a month, that’s all they can be asked to pay if you don’t pay it. The primary obligation is between you and the landlord. The secondary obligation is between the guarantor and you.

 

NEW QUESTION 44
Which of the following will you put into box 5?

  • A. mediation
  • B. adjudication
  • C. arbitration
  • D. litigation

Answer: B

Explanation:
The correct answers are as follows:

This is adjudication. Adjudication is the only option which has a specified timeframe.

 

NEW QUESTION 45
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