RES exam question on Contract & Agency Law: Fiona sells her apartment to Ben under a contract that fixes completion for 30 October…
Fiona sells her apartment to Ben under a contract that fixes completion for 30 October 2026 but says nothing about time being of the essence. Before the contract is signed, Ben's salesperson reviews four propositions about how its terms will work if something goes wrong. (i) If Fiona breaches a condition of the contract, Ben may terminate it and also claim damages. (ii) If she breaches a warranty, Ben's remedy is damages, and the contract continues. (iii) Whether breach of an innominate term lets Ben terminate depends on how serious its consequences are. (iv) As the contract is silent, the completion date is not of the essence, though a notice to complete can make it so. Which of the following statements are correct?
- A(i), (ii) and (iii) only
- B(i), (iii) and (iv) only
- CAll of the above
- D(ii) and (iv) only
Show answer & explanation
Answer
C. All of the above
Explanation
Answer: All of the above. Each type of term carries its own remedy, and a silent contract leaves completion not of the essence until a notice to complete.(i) True. Breach of a condition gives both termination and damages.(ii) True. A warranty breach gives damages only, and the contract stands.(iii) True. For an innominate term, the right to terminate turns on how serious the consequences of the breach are.(iv) True. Time stipulations are construed as in equity, so the silent contract does not make 30 October of the essence. An effective Notice to Complete can.Rule: Conditions allow termination and damages, warranties give damages only, and innominate terms depend on the consequences of breach. A completion date is not of the essence unless the contract says so or an effective Notice to Complete makes it so.Source: Civil Law Act 1909, s 4(9) (current at 1 October 2026); Law Society's Conditions of Sale 2020, condition 15.7; /learn/contract-and-agency-law-res
Study the concept behind this question: Remedies for Breach of a Property Contract
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