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Question 1Civil Law and Contract Law Foundations

Under the Civil Code, which of the following is the correct definition of a contract?

  1. A moral promise that creates no enforceable rights or duties
  2. A unilateral declaration of intent that binds only the person making it
  3. A written document that must be registered to have any legal effect
  4. An agreement between two or more persons intended to create, regulate or extinguish a legal obligation between them Correct answer.

Explanation

A contract is defined as an agreement between two or more persons intended to create, regulate or extinguish a legal obligation between them. The essential element is the meeting of minds directed at legal consequences, not any particular form. Oral agreements can therefore be contracts where no form is required by law.

Question 2Civil Law and Contract Law Foundations

Which element is essential for the valid formation of a contract under the Civil Code?

  1. Mutual consent of the parties capable of contracting Correct answer.
  2. Notarisation of the agreement before a notary
  3. Approval of the contract by a court
  4. Payment of a deposit by the buyer

Explanation

The essential elements of a contract are consent of the parties, capacity to contract, a certain object and a lawful cause. Mutual consent between capable parties is therefore central to formation. Notarisation, deposits and court approval are not general requirements of validity.

Question 3Civil Law and Contract Law Foundations

A person who has not reached the age of majority concludes a contract without the consent of a parent or guardian. What is the general legal position?

  1. The contract is valid only if a notary certifies the minor's understanding
  2. The contract is void from the outset and can never be confirmed
  3. The contract is automatically valid because the minor received a benefit
  4. The contract is voidable at the request of the minor or the minor's legal representative Correct answer.

Explanation

Contracts concluded by a minor without the necessary consent of the legal representative are voidable, not automatically void. The minor or the representative may request annulment, and the contract may also be confirmed once the conditions for confirmation are met. This protects the minor while preserving legal certainty.

Question 4Civil Law and Contract Law Foundations

Which of the following constitutes a defect in consent that may justify annulment of a contract?

  1. The absence of a written document for a sale of movable goods
  2. A change in market prices after the contract was concluded
  3. A mistake concerning a purely incidental motive that was not communicated to the other party
  4. Error concerning the substance of the thing that was the object of the contract Correct answer.

Explanation

Error is a defect of consent when it concerns the substance of the object of the contract or the person of the other party where that person's identity was a determining reason. A mere uncommunicated motive is generally insufficient. Post-contract price changes and lack of writing do not affect consent.

Question 5Civil Law and Contract Law Foundations

A contract is concluded as a result of violence exercised by the other party. What is the effect on the contract?

  1. The contract becomes valid if the violence was mild
  2. The contract is voidable because consent was extorted by violence Correct answer.
  3. The contract is valid because the victim signed the document
  4. The contract is void automatically without any request

Explanation

Violence is a defect of consent that renders the contract voidable at the request of the party whose consent was extorted. Annulment requires a request; the contract is not automatically void. The severity of the violence is assessed by its effect on the victim's free will.

Question 6Civil Law and Contract Law Foundations

In a sale contract, when does ownership of a movable thing generally pass to the buyer?

  1. Only after a notarial deed has been executed
  2. Only when the price has been fully paid
  3. Only when delivery has been recorded in a public register
  4. By the sole effect of the contract, unless the parties or the law provide otherwise Correct answer.

Explanation

Under the principle of transfer by consent, ownership passes by the sole effect of the contract, even before delivery or payment, unless the law or the parties agree otherwise. Payment and delivery are therefore not generally conditions for the transfer of ownership. Registration is relevant for immovable property, not ordinary movables.

Question 7Civil Law and Contract Law Foundations

A seller delivers goods that are affected by hidden defects making them unfit for their intended use. Which remedy is available to the buyer under the warranty for hidden defects?

  1. The buyer may choose between rescission of the sale and a reduction of the price Correct answer.
  2. The buyer may claim damages only if the seller acted in bad faith
  3. The buyer has no remedy once delivery has been accepted
  4. The buyer may only claim a reduction of the price

Explanation

The warranty for hidden defects allows the buyer to choose between rescission of the sale and a reduction of the price. Damages may also be claimed where the seller knew of the defects. Acceptance of delivery does not extinguish the warranty where the defects were hidden.

Question 8Civil Law and Contract Law Foundations

What is the legal nature of an obligation to do something (obligation de faire) in contrast with an obligation to give?

  1. It requires the debtor to perform a service or activity for the creditor Correct answer.
  2. It is always a natural obligation without legal sanction
  3. It requires the debtor to transfer ownership of a thing
  4. It can only be enforced by seizing the debtor's property

Explanation

An obligation to do requires the debtor to carry out a service or activity, whereas an obligation to give concerns the transfer of a thing. Breach of an obligation to do may lead to damages and, where possible, to enforcement in kind. It is a civil obligation with legal sanction.

Question 9Civil Law and Contract Law Foundations

Which of the following is a lawful cause (cause licite) for a contract?

  1. A cause that is permitted by law and consistent with public order and good morals Correct answer.
  2. A cause that is prohibited by mandatory law
  3. A cause that depends solely on the subjective belief of one party
  4. A cause that is contrary to public order

Explanation

The cause of a contract must be lawful, meaning it must not be prohibited by law and must not be contrary to public order or good morals. A contract with an unlawful cause is void. The assessment is objective, not dependent on one party's private belief.

Question 10Civil Law and Contract Law Foundations

A contract contains a clause exempting a party from liability for its own intentional wrongdoing. What is the effect of that clause?

  1. The clause converts the intentional fault into ordinary negligence
  2. The clause is valid only if approved by a notary
  3. The clause is void because liability for intentional fault cannot be excluded Correct answer.
  4. The clause is valid because the parties are free to allocate risk

Explanation

Clauses excluding or limiting liability for intentional fault or gross negligence are void as contrary to public order. Freedom of contract does not extend to exempting a party from liability for its own deliberate wrongdoing. The clause is therefore unenforceable in that respect.

Question 11Civil Law and Contract Law Foundations

When is a contract considered concluded between parties negotiating at a distance?

  1. When both parties have signed a written document
  2. When the acceptance reaches the offeror Correct answer.
  3. When the offeror writes the offer
  4. When the offeree reads the offer

Explanation

Under the reception theory, acceptance takes effect when it reaches the offeror, and the contract is concluded at that moment. Writing or reading the offer alone does not conclude the contract. A signed document is not required unless the law imposes a form.

Question 12Civil Law and Contract Law Foundations

An offeror promises to keep an offer open for a specified period. What is the general effect of such a promise where it is not supported by consideration?

  1. The offer is void because it lacks a price
  2. The offer may still be revoked, but revocation contrary to the promise may give rise to damages Correct answer.
  3. The offer becomes a binding contract immediately
  4. The offer can never be revoked before the period ends

Explanation

A promise to keep an offer open is generally not binding in itself unless supported by consideration or made in a required form. Revocation contrary to the promise may nevertheless engage the offeror's liability for damages. The offer does not thereby become a contract.

Question 13Civil Law and Contract Law Foundations

Which of the following best describes the principle of good faith in the performance of contracts?

  1. Good faith replaces all express contractual terms
  2. Good faith applies only to written contracts
  3. Parties may disregard their obligations whenever performance becomes inconvenient
  4. Parties must perform their obligations honestly and fairly, and negotiations and performance must not be conducted abusively Correct answer.

Explanation

Good faith requires parties to perform their obligations honestly, fairly and without abuse of rights, and it also governs pre-contractual negotiations. It complements rather than replaces the express terms. It applies to all contracts, whether written or oral.

Question 14Civil Law and Contract Law Foundations

A debtor is unable to perform an obligation because of an event of force majeure. What is the general consequence?

  1. The debtor must pay a penalty regardless of the event
  2. The debtor is liable unless it proves ordinary negligence
  3. The debtor is exempt from liability because performance was prevented by an external, unforeseeable and irresistible event Correct answer.
  4. The obligation is automatically transferred to a third party

Explanation

Force majeure excuses the debtor from liability where an external, unforeseeable and irresistible event prevents performance. The burden of proving these conditions lies with the debtor. The obligation is not transferred to a third party, and no penalty is due for the prevented performance.

Question 15Civil Law and Contract Law Foundations

What is the effect of a resolutory condition in a contract?

  1. It suspends the formation of the contract until the condition occurs
  2. It requires the parties to renegotiate the contract
  3. It causes the contract to be retroactively extinguished when the condition occurs Correct answer.
  4. It converts the contract into a unilateral act

Explanation

A resolutory condition provides that the contract will be extinguished if a future and uncertain event occurs. When the condition is fulfilled, the contract is unwound, generally retroactively. It does not suspend formation, which is the role of a suspensive condition.

Question 16Civil Law and Contract Law Foundations

A contract is concluded with a clause stating that it may be terminated at will by either party. What is the legal position?

  1. Termination at will is permitted for contracts of indefinite duration, subject to notice and good faith Correct answer.
  2. Termination at will is permitted only for contracts of fixed duration
  3. The clause is always void because contracts must be irrevocable
  4. Termination at will requires prior court approval in every case

Explanation

Contracts of indefinite duration may generally be terminated at will, provided reasonable notice is given and the right is not exercised abusively or in bad faith. Fixed-term contracts cannot be unilaterally terminated at will unless the parties so agree. Court approval is not a general requirement.

Question 17Civil Law and Contract Law Foundations

What distinguishes a nullity (void contract) from a voidable contract?

  1. There is no legal difference between the two categories
  2. A void contract can be confirmed by the parties, whereas a voidable contract cannot
  3. A void contract requires a court judgment, whereas a voidable contract is void automatically
  4. A void contract produces no effects and cannot be confirmed, whereas a voidable contract produces effects until annulled Correct answer.

Explanation

A void contract is deemed never to have existed and cannot be confirmed, whereas a voidable contract produces effects until it is annulled and may be confirmed. Nullity protects public order, while voidability protects a private interest. The distinction matters for confirmation and for the effects of annulment.

Question 18Civil Law and Contract Law Foundations

Which of the following is an example of a synallagmatic (bilateral) contract?

  1. A will disposing of property
  2. A donation made without any obligation on the donee
  3. A unilateral promise to pay a reward
  4. A sale, in which the seller transfers the thing and the buyer pays the price Correct answer.

Explanation

A synallagmatic contract creates reciprocal obligations for both parties, as in a sale where the seller must deliver and the buyer must pay. This mutual interdependence distinguishes it from unilateral contracts. A will is not a contract at all, and a pure donation creates obligations for one side only.

Question 19Civil Law and Contract Law Foundations

A party concludes a contract with a person who appears to be the agent of another but who in fact has no authority. If the apparent principal later ratifies the contract, what is the effect?

  1. Ratification has no effect because authority must exist at the time of contracting
  2. Ratification validates the contract retroactively as if the agent had been authorised Correct answer.
  3. Ratification converts the contract into a unilateral act
  4. Ratification makes the agent personally liable for the whole price

Explanation

Ratification by the apparent principal validates the contract concluded by the unauthorised agent, generally with retroactive effect as if authority had existed. Until ratification, the contract is not binding on the principal. The agent may be liable if ratification does not occur.

Question 20Civil Law and Contract Law Foundations

What is the effect of a penalty clause (clause pénale) in a contract?

  1. It automatically voids the contract if a breach occurs
  2. It requires the debtor to perform specifically in all cases
  3. It prevents the creditor from ever claiming damages
  4. It fixes in advance the damages due for breach, subject to possible judicial adjustment if manifestly excessive Correct answer.

Explanation

A penalty clause determines in advance the amount payable in case of breach, thereby easing proof of damage. Courts may adjust the penalty where it is manifestly excessive or derisory. The clause does not void the contract and does not preclude enforcement of the principal obligation.

Question 21Civil Law and Contract Law Foundations

Which of the following statements about the interpretation of contracts is correct?

  1. Ambiguous terms are interpreted solely against the party who drafted them, regardless of context
  2. Contracts are interpreted according to the common intention of the parties, considering the context and good faith Correct answer.
  3. Interpretation is left entirely to the discretion of the judge without reference to the parties' intent
  4. Only the literal meaning of the words may be considered

Explanation

Contracts are interpreted by seeking the common intention of the parties rather than stopping at the literal meaning of the words. The context, the nature of the transaction and good faith are relevant. The contra proferentem rule applies only as a residual aid in cases of genuine ambiguity.

Question 22Civil Law and Contract Law Foundations

A contract for the sale of immovable property is concluded orally. What is the position regarding its validity?

  1. The oral sale is valid, but it must be evidenced in writing to be enforceable in certain respects Correct answer.
  2. The oral sale is valid and fully enforceable without any writing
  3. The oral sale is void because all immovable sales require a notarial deed to exist
  4. The oral sale is voidable at the buyer's option

Explanation

A sale of immovable property is generally valid by consent, but the law may require a written instrument for registration and enforceability against third parties. A notarial deed is not required for the existence of the contract. The absence of writing affects proof and publicity rather than the basic validity of consent.

Question 23Civil Law and Contract Law Foundations

What is the role of a notary in relation to contracts under civil law?

  1. The notary drafts and authenticates certain acts and gives them authentic character Correct answer.
  2. The notary is a commercial agent who negotiates the price
  3. The notary decides disputes between the parties to a contract
  4. The notary substitutes for the parties' consent

Explanation

The notary is a public officer who drafts and authenticates certain acts, conferring on them authentic character and date certainty. The notary does not adjudicate disputes, which belongs to courts. The notary also does not replace the parties' consent or negotiate on their behalf.

Question 24Civil Law and Contract Law Foundations

A debtor owes a sum of money and fails to pay on the due date. What is the general effect of a formal notice (mise en demeure)?

  1. It makes the debtor liable for default interest and puts the risk of the thing on the debtor Correct answer.
  2. It transfers ownership of the debtor's property to the creditor
  3. It automatically rescinds the contract
  4. It extinguishes the debt by prescription

Explanation

Formal notice places the debtor in default, which generally triggers default interest and shifts the risk of loss to the debtor. It does not by itself rescind the contract or extinguish the debt. Transfer of ownership of the debtor's property requires enforcement measures.

Question 25Civil Law and Contract Law Foundations

Which of the following best describes the principle of freedom of contract?

  1. Parties may ignore mandatory rules if both agree to do so
  2. Parties may contract only in the forms expressly authorised by statute
  3. Parties must obtain prior administrative approval for every contract
  4. Parties are free to determine the content and terms of their contract within the limits of mandatory law and public order Correct answer.

Explanation

Freedom of contract allows parties to shape the content of their agreement, but it operates within the limits set by mandatory law, public order and good morals. It does not permit parties to disregard mandatory rules by mutual agreement. Prior administrative approval is required only in specific regulated areas.

Question 26Civil Law and Contract Law Foundations

A notary is asked to draft an authentic instrument recording a loan agreement between two private parties. Which statement best describes the evidentiary status of such an authentic instrument in a civil law system?

  1. It constitutes proof of its contents between the parties and may be attacked only through a specific procedure for challenging authenticity. Correct answer.
  2. It is binding only if both parties later confirm its contents before a second notary.
  3. It has no greater evidentiary weight than a private writing signed by the parties.
  4. It proves only the fact of signature and never the underlying obligations described.

Explanation

An authentic instrument drawn up by a public officer with the required formalities constitutes full proof of its contents between the parties. It can only be contested by a dedicated procedure challenging its authenticity (inscription de faux), which is a heavier burden than disputing a private writing.

Question 27Civil Law and Contract Law Foundations

Two merchants agree on a sale of goods and fix the price, but they expressly leave delivery terms to be settled later. What is the general position on the formation of the contract?

  1. The contract exists only as a preliminary agreement that has no binding force until delivery terms are fixed.
  2. The contract is formed once the essential elements, including the price, are agreed, even if ancillary terms remain to be settled. Correct answer.
  3. The contract is void because delivery terms are an essential element of any sale.
  4. The contract is unenforceable until a notary records the delivery terms.

Explanation

A contract is concluded when the parties agree on the essential elements; the price and the thing are essential to a sale, while ancillary terms such as delivery details can be settled later or by reference to reasonableness. Agreement on the essential elements suffices for binding formation.

Question 28Civil Law and Contract Law Foundations

A property owner grants a neighbour a right to pass across his land to reach a public road, and the parties register the arrangement. Which characterization best fits this right?

  1. A lease of the pathway conferring exclusive possession on the neighbour.
  2. A mere tolerance revocable at any time by the servient owner.
  3. A personal claim enforceable only against the original grantor and not transferable.
  4. A predial servitude attaching to the dominant and servient land and passing with ownership of those lands. Correct answer.

Explanation

A right of passage established for the benefit of a neighbouring parcel and registered as such is a predial servitude, which attaches to the land rather than to a person. It therefore follows ownership of the dominant and servient tenements when they are transferred.

Question 29Civil Law and Contract Law Foundations

A creditor assigns a claim against a debtor to a third party. Under a civil law regime requiring that the assignment be notified to or accepted by the debtor, what is the effect of the assignment as between the assignor and the assignee before such notification?

  1. The assignment transfers the claim to the assignee but the debtor may pay the assignor with full discharge only after a court order.
  2. The assignment is effective between assignor and assignee, but it is not opposable to the debtor until notification or acceptance. Correct answer.
  3. The assignment requires the debtor's consent to exist at all, so no transfer occurs without it.
  4. The assignment is void ab initio and the assignee acquires nothing.

Explanation

In systems that follow this model, the transfer operates between the parties upon agreement; notification or acceptance is the step that makes it opposable to the debtor. Until then, the debtor who pays the original creditor is discharged.

Question 30Civil Law and Contract Law Foundations

A notary must determine which law governs a contract containing a choice-of-law clause selecting a foreign law, where the chosen law would defeat a mandatory rule of the forum protecting a weaker party. How should the conflict be resolved?

  1. The notary must apply both laws cumulatively, giving effect to whichever provision is more favourable to the stronger party.
  2. The mandatory rule of the forum may apply notwithstanding the choice of law, so the protective rule can override the selected foreign law. Correct answer.
  3. The contract is automatically void because a foreign law was chosen.
  4. The chosen foreign law always prevails because party autonomy is absolute in contractual matters.

Explanation

Party autonomy in choice of law is not unlimited: mandatory rules of the forum that protect a weaker party or serve important public interests may be applied despite a contrary choice-of-law clause. The notary should identify such overriding rules rather than mechanically applying the selected law.

Question 31Property Law, Mortgages and Security Rights

Under the Land Registration Act 2002 (England and Wales), which class of title is granted where the registrar is satisfied that the applicant has a good leasehold title but cannot confirm the freehold title out of which the lease is granted?

  1. Qualified leasehold title
  2. Good leasehold title Correct answer.
  3. Possessory leasehold title
  4. Absolute leasehold title

Explanation

Good leasehold title is the appropriate class where the leasehold estate itself is satisfactorily established but the superior freehold title has not been deduced or investigated to the registrar's satisfaction. Absolute leasehold title requires the superior title to be adequately established as well. Possessory and qualified titles address different defects, namely lack of documentary proof of title and specific identified doubts respectively.

Question 32Property Law, Mortgages and Security Rights

A registered freehold proprietor grants a legal lease for a term of five years at a market rent, with no option to renew and no premium. Which statement best describes the correct registration treatment of that lease?

  1. It must be registered with its own title because it exceeds three years
  2. It overrides the registered title automatically as an interest that binds without registration
  3. It operates only in equity until protected by a notice in the register
  4. It takes effect as a registrable disposition that must be completed by registration to confer legal status Correct answer.

Explanation

A legal lease for a term of more than three years is a registrable disposition under the Land Registration Act 2002, so legal effect depends on completion by registration. Until registered it takes effect as an equitable interest only. Leases of three years or less are the ones that bind automatically without registration.

Question 33Property Law, Mortgages and Security Rights

A borrower charges registered land to a bank by way of a legal mortgage created by deed. What is required for the charge to take effect at law as a registrable disposition?

  1. Payment of the mortgage advance to the borrower
  2. Delivery of the title deeds to the lender
  3. Execution of the deed alone, since the deed creates the legal charge
  4. Registration of the charge in the register of title Correct answer.

Explanation

A legal charge over registered land is a registrable disposition, and legal effect is conferred only on completion by registration. The deed of charge creates the interest in equity before registration. Delivery of deeds and payment of the advance are commercial matters that do not determine the legal status of the charge.

Question 34Property Law, Mortgages and Security Rights

Which of the following best describes the equity of redemption in relation to a mortgage of land?

  1. The borrower's contractual right to prepay the loan at any time
  2. The lender's right to sell the property on default
  3. The borrower's residual interest in the property, subject to the mortgage, which cannot be fettered by clogging provisions Correct answer.
  4. The lender's right to possession before default occurs

Explanation

The equity of redemption is the borrower's remaining beneficial interest in the mortgaged property once the mortgage is granted. Equity protects it by striking down terms that unreasonably clog or fetter the right to redeem. It is distinct from the lender's remedies and from any contractual prepayment entitlement.

Question 35Property Law, Mortgages and Security Rights

A lender holds a legal charge over a dwellinghouse. Which statutory precondition must generally be satisfied before the lender may exercise its power of sale?

  1. The mortgage money must have become due and a statutory notice must have been served, with three months having elapsed Correct answer.
  2. The borrower must have been declared bankrupt
  3. The lender must first obtain a court order for sale in every case
  4. The property must have been vacated by the borrower for at least twelve months

Explanation

The power of sale arises once the mortgage money is due, but it becomes exercisable only after a statutory notice requiring payment has been served and three months have passed without compliance. A court order is not a universal precondition. Bankruptcy of the borrower and vacation of the property are not statutory triggers for exercisability.

Question 36Property Law, Mortgages and Security Rights

In deciding whether to grant a lender possession of a mortgaged dwellinghouse, which approach reflects the current position in England and Wales?

  1. The court has a discretion and must consider whether it is reasonable to postpone or suspend possession, taking account of the borrower's circumstances Correct answer.
  2. The court must refuse possession whenever the borrower occupies the property as a home
  3. The court must always grant possession once default is proved
  4. The court may only postpone possession where the borrower has tendered the full arrears

Explanation

Where the lender seeks possession of a dwellinghouse, the court retains a discretion and may adjourn, stay, suspend or postpone possession if it considers it reasonable, having regard to the borrower's circumstances. Possession is not automatic on proof of default. The discretion is broader than a simple arrears-tender rule.

Question 37Property Law, Mortgages and Security Rights

A borrower defaults on a loan secured by a charge over registered land. The lender appoints a receiver. Which statement best describes the receiver's principal function?

  1. To take control of the charged property and collect income for the benefit of the lender Correct answer.
  2. To vest the legal estate in the lender
  3. To extinguish the borrower's equity of redemption
  4. To sell the charged property free of the charge

Explanation

A receiver appointed under the statutory power takes control of the charged property and applies income towards the secured debt. The receiver does not sell the property as mortgagee, nor does appointment transfer the legal estate. The equity of redemption is not extinguished by receivership.

Question 38Property Law, Mortgages and Security Rights

Two lenders each hold a charge over the same registered title. Lender A registered its charge first; Lender B registered later but had actual notice of A's charge when it advanced funds. How is priority generally determined?

  1. In favour of Lender B because it advanced funds in good faith
  2. In favour of Lender A because priority follows the order of registration of the charges Correct answer.
  3. In favour of whichever lender first demanded repayment
  4. Equally between the lenders regardless of registration order

Explanation

For registered charges, priority is governed by the order in which the charges are entered in the register, not by the date of the loan or the parties' knowledge. Actual notice of an earlier registered charge does not reverse that order. The first-registered charge therefore ranks ahead.

Question 39Property Law, Mortgages and Security Rights

A purchaser buys registered land and completes the purchase. Which statement correctly reflects the effect of registration of the transfer?

  1. The purchaser's title relates back to the date of the contract
  2. The purchaser must wait for the land certificate before the estate vests
  3. The purchaser holds only an equitable interest until the seller's mortgage is discharged
  4. The purchaser becomes the registered proprietor and the legal estate vests on registration Correct answer.

Explanation

On registration of a transfer of registered land, the transferee becomes the registered proprietor and the legal estate vests in them. The disposition is completed by registration. The old land certificate system no longer governs vesting of title.

Question 40Property Law, Mortgages and Security Rights

An easement is claimed over registered land. Which characteristic is essential to the existence of an easement at law?

  1. There must be a dominant and a servient tenement, and the easement must accommodate the dominant tenement Correct answer.
  2. The easement must be granted for consideration
  3. The easement must be granted for a term exceeding seven years
  4. The easement must be registered as a separate title

Explanation

The classic characteristics of an easement require a dominant and servient tenement, accommodation of the dominant tenement, diversity of ownership or occupation, and a right capable of forming the subject matter of a grant. Consideration and a minimum term are not defining features. Registration affects enforceability rather than the essential nature of the right.

Question 41Property Law, Mortgages and Security Rights

A restrictive covenant affecting registered land was created in 1990 but was never entered in the register. The current registered proprietor purchased for value without notice of the covenant. What is the general effect of non-registration?

  1. The covenant is automatically converted into an easement
  2. The covenant remains fully enforceable against the purchaser because it runs with the land
  3. The covenant is void against the purchaser for value, since it was not protected by registration Correct answer.
  4. The covenant binds only the original covenantor personally

Explanation

An interest that requires protection by notice or caution and is not so protected is void against a purchaser of the registered estate for valuable consideration. The purchaser's lack of notice is consistent with that outcome. Non-registration does not convert the covenant into an easement or preserve it against such a purchaser.

Question 42Property Law, Mortgages and Security Rights

Which of the following interests over registered land operates as an overriding interest that binds a purchaser without entry in the register?

  1. An estate contract protected by a notice
  2. A legal charge created by deed but not registered
  3. A restrictive covenant entered as a notice
  4. A legal lease granted for a term of two years Correct answer.

Explanation

Short legal leases of three years or less, taken at a rent without a premium, are overriding interests that bind without registration. A legal charge requires registration to take effect at law. Interests protected by notice bind because of the entry, not as overriding interests.

Question 43Property Law, Mortgages and Security Rights

A borrower has fallen into arrears on a regulated mortgage of a dwellinghouse. The lender wishes to enforce the security. Which statement best reflects the regulatory framework applicable to lenders in England and Wales?

  1. Lenders must comply with conduct rules requiring fair treatment of customers and the consideration of forbearance options before enforcement Correct answer.
  2. Lenders are free to repossess without any regulatory oversight once arrears arise
  3. Lenders must always write off arrears exceeding three months
  4. Lenders may enforce only after the borrower has consented in writing

Explanation

Mortgage conduct regulation requires lenders to treat borrowers fairly and to consider reasonable forbearance before taking enforcement action. Enforcement is not free of oversight, nor is it conditional on borrower consent. There is no rule requiring automatic write-off after three months.

Question 44Property Law, Mortgages and Security Rights

A mortgage deed contains a term purporting to give the borrower's equity of redemption to the lender automatically on any default. How is such a term likely to be treated by a court?

  1. It will be converted into a valid power of sale
  2. It will be enforced as a freely negotiated commercial term
  3. It will be struck down as an impermissible clog on the equity of redemption Correct answer.
  4. It will be enforced only if the borrower had independent legal advice

Explanation

Equity protects the borrower's right to redeem and will not enforce provisions that unreasonably clog or fetter the equity of redemption. A term automatically forfeiting the equity on default is a classic clog and is liable to be struck down. Independent advice or commercial negotiation does not save a genuine clog.

Question 45Property Law, Mortgages and Security Rights

A lender is considering selling charged property under its power of sale. Which duty does the lender owe to the borrower when exercising that power?

  1. A duty to act in good faith and to take reasonable care to obtain the true market value at the time of sale Correct answer.
  2. A duty to consult the borrower before accepting any offer
  3. A duty to obtain the best possible price regardless of market conditions
  4. A duty to sell only by public auction

Explanation

The mortgagee exercising a power of sale owes a duty of good faith and a duty to take reasonable care to obtain the property's true market value at the time of sale. The standard is reasonableness, not a guarantee of the best conceivable price. Sale by auction and borrower consultation are not mandatory.

Question 46Property Law, Mortgages and Security Rights

A co-owner of registered land in England and Wales holds the legal estate as a joint tenant with another person. Which statement correctly describes the legal estate?

  1. It is held as a joint tenancy that can never be severed
  2. It is held according to the proportions recorded in the transfer
  3. It is held on trust for the beneficial owners, and joint tenancy of the legal estate is the usual position Correct answer.
  4. It is held as tenants in common in equal shares

Explanation

Where land is co-owned, the legal estate is normally held by the co-owners as joint tenants on trust for the persons beneficially entitled. Beneficial ownership may be joint or in common. Severance operates on the beneficial interest, not on the legal estate.

Question 47Property Law, Mortgages and Security Rights

A person occupies registered land under an unregistered lease granted for a term of four years at a premium. How is that lease most appropriately protected against a subsequent purchaser?

  1. By delivery of the lease to the purchaser
  2. By registration of a notice in the register Correct answer.
  3. By recording it in the borrower's mortgage deed
  4. By reliance on it as an overriding interest

Explanation

A lease for more than three years is not an overriding interest and must be protected by registration, typically by notice, to bind a purchaser. Because a premium was paid, it does not fall within the short-lease protection. Delivery of documents or mortgage records do not protect the interest in the register.

Question 48Property Law, Mortgages and Security Rights

Which of the following best explains the doctrine of tacking in relation to mortgages?

  1. A borrower may transfer a mortgage to another lender without consent
  2. A lender may add arrears to the principal sum without any agreement
  3. A lender may consolidate several mortgages into one security
  4. A subsequent charge may gain priority over an intervening charge where the later advance is made without notice of the intervening charge and the earlier charge secures further advances Correct answer.

Explanation

Tacking allows a lender making further advances under an existing charge to obtain priority over an intervening charge where the further advance is made without notice of it and the earlier charge secures further advances. It is not a rule about adding arrears or consolidating mortgages. Consolidation is a separate doctrine.

Question 49Property Law, Mortgages and Security Rights

A lender holds a charge over registered land and wishes to rely on its power of sale. A dispute arises over whether the power has become exercisable. Which factor is most relevant to that question?

  1. Whether the mortgage money has become due and the statutory notice period has expired Correct answer.
  2. Whether the property has increased in value
  3. Whether the borrower has vacated the property
  4. Whether the lender has appointed a receiver first

Explanation

The power of sale becomes exercisable when the mortgage money has become due and the statutory notice has been served and not complied with within the specified period. Vacation of the property, appointment of a receiver and changes in value are not the statutory triggers.

Question 50Property Law, Mortgages and Security Rights

An easement is granted by deed over registered land for the benefit of a neighbouring registered estate. What is the most reliable way to protect the easement so that it binds successors in title of the servient owner?

  1. Rely on the deed alone, since easements bind automatically
  2. Register a notice against the servient registered title Correct answer.
  3. Obtain the servient owner's written acknowledgement
  4. Register the easement as a separate leasehold title

Explanation

A legal easement is a registrable disposition and should be completed by registration, with notice entered against the servient title, to ensure it binds successors. The deed alone is insufficient for registered land. A written acknowledgement is not a substitute for registration.