Engineering Contracts True/False Questions
Engineering Contracts True/False Questions
This section consists of true/false questions. State whether the following statements are true or false. In your
answer book, write down ‘true’ or ‘false’ and provide a brief explanation for your answer where appropriate.
6A.1 The law of obligation is based on the principle that one must honour one’s promises.
True, METS-2: 106
6A.2 All agreements between persons are contracts.
False, Not all agreements create obligations. METS-2: 107.
6A.3 A contract is an agreement that creates rights and duties.
True, METS-2: 107
6A.4 Parties must reach agreement before a contract can be formed.
True. It is one of the requirements for a contract. METS-2: 107
6A.5 A contract can only come into existence when both parties have contractual capacity.
True. It is one of the requirements for a contract. METS-2: 107.
6A.6 The creditor has a duty to perform.
False, The debtor has a duty to perform. METS-2: 108
6A.7 In terms of a contract, a debtor is a person who has a duty to perform.
True. METS-2: 108
6A.8 One of the requirements of an offer is that it must be definite and complete.
True. It is one of the requirements of an offer. METS-2: 110.
6A.9 A tender that was called for constitutes an offer.
False, A tender that was called for was not addressed to a specific person which is one of the
requirements of an offer. METS-2: 110.
6A.10 An advertisement is an offer to do business.
False, It is only an invitation to do business – not an offer. METS-2: 110
6A.11 One of the requirements of an offer is that it must be directed at a definite person or persons.
True. METS-2: 110.
______
6A.12 A contract has not yet been concluded when a counter-offer is made.
6A.13 An offer lapses or expires when a counter-offer is made.
6A.14 An offer lapses on the death of the offeror or offeree.
6A.15 The acceptance of an offer must be unconditional for a valid contract to be formed.
______
This section consists of multiple-choice questions. In your answer book, write down the number of the
question, and next to it the number representing the correct option, for example ‘6.15 [1]’.
6B.6 John constructs carports. He recently placed an advertisement in the local newspaper to
advertise his business. Which one of the following statements is correct? (2)
[1] The advertisement is an offer to do business.
[2] An advertisement is merely an invitation to do business while a tender that is called for is a
firm offer to do business.
[3] An advertisement and a tender that is called for are merely invitations to do business.
6B.7 The carport at Peter’s new home was rusty and in a bad condition. He entered into a contract
with AAA Carports for the construction of a new carport on 5 January 2008. He paid AAA
Carports an amount of R3000 on 5 January 2008. The terms of the contract stated that Peter
was responsible for removing the old carport and that AAA Carports had to start constructing the
new carport on the same spot at any time on or after 12 January 2009. The company had to
complete the carport by 19 January 2009. On 12 January 2009 a supervisor and workers from
AAA Carports arrived at Peter’s home to start with the construction of the carport. By then Peter
had not yet removed the old carport – he did so only on 14 January 2009. Which one of the
following statements is correct? (2)
[1] Peter did not breach the contract because AAA Carports had until 19 January to construct
the car port.
[2] There was a breach of contract known as mora creditoris.
[3] AAA Carports are in the wrong, because they should have checked with Peter if he had
removed the old carport.
[4] There was a breach of contract, known as repudiation.
[5] There was a breach of contract, known as mora debitoris.
6B.10 Which one of the following is not a requirement for the conclusion of a valid contract? (2)
[1] Each party to the contract must have capacity to act.
[2] There must be consensus between the parties.
[3] It must be physically possible to perform in terms of the contract.
[4] The contract must be permitted by law.
[5] The contract must be in writing, signed and dated.
6B.11 Richard makes an offer to buy Tumelo’s motorcar for R10 000. He gives Tumelo 10 days to accept
his offer. On the ninth day, Tumelo informs Richard that he will sell his car to him, but that he wants
R12 000 for it.
Which one of the following statements is correct? (2)
[1] A contract came into existence between Richard and Tumelo with a purchase price of R12
000.
[2] A contract came into existence between Richard and Tumelo with a purchase price of R10
000.
[3] No contract came into existence between Richard and Tumelo as Tumelo made a counter-
offer, which Richard has not yet accepted.
[4] Richard’s offer still stands.
6B.15 Your company (X) wants to enter into a contract with another company (Y), which manufactures
components that form part of the product that your company assembles. X offers Y a price of
R10,50 per component but Y wants R11,50 per component. Read the following three
statements:
a) There is no agreement between the two parties and therefore no contract.
b) X’s offer expired because Y made a counter-offer.
c) A contract will come into existence if X informs Y that it is willing to pay R11,50 per
component.
Which of the above statements is/are correct? (2)
[1] a and b
[2] b and c
[3] a, b and c
[4] a and c
[5] none (neither a, b nor c)
6B.16 Read the three statements below regarding the contract for the letting and hiring of work.
______
Question 6c.1
Explain whether your mine, plant or factory must accept the lowest tender, eg for drilling blast holes. (3)
Answer
The employer has no obligation to accept a particular tender or lowest tender (unless the tender
documents state otherwise). A tender is not an offer. It is merely an invitation to do business. Not only
cost but also other factors such as safety, deliverability and quality have to be considered. The safety
record and track record of the contractor may be considered before a decision is made to accept a
tender or not.
Question 6c.2
List two factors that can render a contract voidable. (2)
Answer 6c.2
Definitions of “voidable” (background)
2) A contract that has legal effect and force when it is made, but is liable to be subsequently annulled
or set aside by the courts through the process of rescission
([Link]
Question 6c.3
Explain the contractual capacity of the following parties: (4)
• A company
• A boy, 17 years of age
• A child of 6 years
• The state
Answer 6c.3
Company: A company is a juristic person and needs representatives (or organs) to act on its behalf.
The contractual capacity of the representative is determined by the powers given to him by the
company. (METS-2: 116)
Boy, 17 years old: The boy has limited contractual capacity (METS-2: 116-117). The boy may only
conclude a valid contract with the assistance of his guardian.
Child, 6 years of age: Has no contractual capacity. (METS-2: 116-117)
State: Contract must be authorised by the responsible minister. (METS-2: 116) (4)
Question 6c.4
a) List and discuss a number of reasons for making use of contractors. (6)
a) Those operations/activities that are not considered to be the core business of an organisation
and which other organisations may provide with greater efficiency and at reduced cost to the
company should be outsourced.
Loading and hauling at a mine may be contracted out for the following reasons:
• The contractor must usually provide his/her own equipment. The mining company therefore
requires less capital to buy and maintain equipment.
References:
• Bracher PA, August 1992, Some legal aspects of the tender, Institute of Quarrying of SA
• Ford M, 11 March 1993, Selective and effective use of contractors at Rietspruit opencast
th
services – 24 Annual General Meeting, Institute of Quarrying of SA
b) List various costs that have to be considered when deciding on whether an activity should be done
in-house or to invite contractors to tender for it. (6)
(Minerals Industry)
c) Discuss a number of managerial implications of using contractors at a mine or quarry. (8)
d) What is your mine’s policy towards the use of contractors? Discuss some examples of activities
that are already contracted out or which should be contracted out in future. Which types of
activities on a mine could be contracted out successfully? (8)
Question 6c.5
Your company (A) wants to enter into a contract with another company (B), which manufactures
components that form part of the product that your company assembles.
a) When does a contract come into force/existence? List the requirements for a contract to come
into existence. (4)
b) Your company offers company B a price of R10,50 per component. Company B wants at least
R11,50 per component. Briefly explain whether a valid contract has been concluded or not. (2)
[6]
Question 6c.6
Briefly distinguish between mora debitoris and mora creditoris. (2)
Question 6c.7
Briefly explain the principles relating to the contract for the letting and hiring of work. (4)
Question 6c.8
Differentiate between the following two types of contracts:
• Contracts for the letting and hiring of work
Question 6c.9
Briefly define a contract. (2)
Question 6c.10
a) Define obligation and contractual performance and explain the consequences of the coming into
existence of an obligation. Create an example of a contract to illustrate the specific duties of
each party to the contract. (6)
Or
b) A surface mining company enters into a contract with an earthmoving company. The purpose of
the contractual agreement is to outsource the loading and hauling functions at the mine to the
earthmoving contractor at a fee. The fee structure is described in detail in the contract. Describe
obligation and contractual performance in the context of this case. Explain the consequences of
an obligation coming into existence. You must use the following terminology in your explanation
and it should be clear what these terms mean: debtor, creditor, right and duty. (4)
Question 6c.11
Briefly differentiate between the requirements for a valid offer and a valid contract. (8)
Question 6c.12
Differentiate between express, implied and tacit terms. (3)
Question 6c.13
Define duress and state what the consequences of duress could be when drawing up a contract. (2)
Question 6c.14
You want to rent a workshop for your company and to enter into a contract with the owner of the
workshop. List and discuss some of the requirements and terms of this contract.
{Hint: This is a broad question. The following may be discussed: 1) Requirements for a contract to
come into existence (METS-2: 107) and 2) terms of a contract (METS-2, pp. 125-128)} (8)
Question 6c.15
Mary and Susan agree that their verbal contract must be reduced to writing, Explain whether a valid
contract will be concluded before it has been reduced to writing. (METS-2, p. 136, 6.6) (3)
Question 6c.16
Discuss the transfer and termination of obligations arising from a contract. (8)
Question 6c.18
Match each of the following terms of contract on the left of the table with its correct definition on the
right of the table below. In your answer book, write down the number of each term, and next to it the
letter representing the correct option, e.g. 1. j. (6)
Question 6c.19
Match each of the following terms of contract on the left of the table with the correct example on the
right of the table below. In your answer book, write down the number of each term, and next to it the
letter representing the correct option, for example “1. j”. (6)
Question 6c.20
Match each of the following terms (related to the transfer and termination of obligations arising from a
contract) on the left of the table below with the correct description or example on the right of the table.
In your answer book, write down only the number of each term, and next to it the letter representing
the correct option, e.g. 1. j. (6)
1. Cession agreement a. The transfer of contractual duties from the original debtor to
a third party.
2. Delegation b. Peter was required to deliver golden earrings to Sharon.
They both agreed that he would deliver a golden ring in its
place.
3. Novation c. Rights arising from a contract can be transferred by the
holder thereof to another person.
4. Set-off d. Example 1: John owes his father R500. Before he could pay
his father this amount, he fixed his father’s car for the amount
of R1 500. The result is that his father now has to pay him R1
000.
Question 6c.21
ABC Electricity Generation Ltd is and independent power producer (IPP). Eskom made ABC and offer
to purchase 600 000 MWh of electric energy over a period of one year at a price of 22c per kWh. ABC
informs Eskom that it would provide the 600 000 MWh but at a price of 29c/kWh. Explain whether a
contract came into existence. (2)
Question 6c.22
List five ways in which breach of contract can occur. (5)
Question 6c.23
List three (3) remedies for breach of contract. (3)
Question 6c.24
Differentiate between a debtor and creditor – the terminology as used in the context of contracts. (2)
Question 6c.25
Briefly explain what a mistake is with regards to a contract. (2)
Question 6c.26
Why would a call for tenders not constitute an offer? (1)
Question 6c.27
Match each of the concepts (on the left-hand side) with its definition or description (on the right-hand
side). In your answer book, just write down the number and next to it the letter representing the correct
option, eg 1. z.
Question 6c.30
List two factors that can render a contract voidable. (2)