Which of the following will you put into box 4?
The correct answers are as follows:
Getting help from another supplier to fulfil the order is subcontracting.
Derrek owns a factory and employs a Facilities Management Company called Balls FM to look after certain aspects of the factory including cleaning and testing the machinery to ensure they are in good working condition. One day he realises that one of the cleaners doesn't work for Balls FM, he works for another company called Bells FM. Which of the following statements regarding subcontracting is true?
'It is okay for Balls to subcontract' is the correct answer. This question is testing whether you know that subcontracting can be a remedy in a contract. It is usually okay for a supplier to use a subcontractor if they're unable to fulfil their responsibilities and the alternative would be to breach the contract. This is a difficult question because you don't get a lot of context- it's based on a similar question in the exam- but just remember subcontracting can be a solution if one party can't fulfil their obligations in a contract. This is better than them breaching the contract. See p.89 for more information on subcontracting
If an innocent party wishes to terminate a contract due to a breach, which of the following is true?
The correct answer is 'only future obligations of the parties are excused and discharged' - all cur-rent and past obligations need to be fulfilled, or remedied (e.g. through liquidated damages). When an innocent party terminates a contract, they are still obliged to fulfil their own obligations. P.47
Which of the following will you put into box 5?
The correct answers are as follows:
This is negotiation - no third party is mentioned and there is a face-to-face meeting in private
Which of the following will you put into box 6?
The correct answers are as follows:
The answer is liquidated damages as they're seeking compensation for loss.
