Law Ch 7

Front 1

What is the most effective use of a business contract?

Back 1

a tool for the management of liability exposure

Front 2

What is the function of an express term with respect to a contract?

Back 2

It explicitly states contractual promises.

Front 3

What is the preferred means of ensuring each party to a contract knows its obligations and the obligations of the other party?

Back 3

The essential terms of a contract are articulated.

Front 4

In what way are assumptions and terms different from one another with respect to the content of a contract?

Back 4

Terms are attributed with legal weight.

Front 5

What is meant by the term “rules of construction” in contract law?

Back 5

guiding principles for interpreting the terms of a contract

Front 6

Why is a reference in a contract to “best quality” considered to be nebulous?

Back 6

Exactly what is best quality becomes a subjective element.

Front 7

A court hearing a contractual dispute has determined that an ambiguous term must be construed against the party drafting the agreement. What is the policy rationale for the court’s finding?

Back 7

The framer should bear the risk of nebulous language.

Front 8

EcoGrow Inc. contractually agreed to deliver two tons of organic fertilizer on March 16 to Organics Inc. The contract provided for the payment of $1000 for each day the delivery may be delayed. An ice storm closed highways, causing Eco to deliver four days late. What could you likely expect a lawyer representing Organics to argue before the court hearing a dispute over the non-payment of the late fee?

Back 8

to ignore the parties’ intentions and apply the plain-meaning rule

Front 9

Which of the following would strongly support the statement suggesting “the guiding principles for interpreting the terms of a contract are often conflicting”?

Back 9

The parties’ intentions are given effect, and a contract as it appears is enforceable.

Front 10

Justice Hall listened to plaintiff’s counsel argue his client’s position relating to a contractual dispute. Counsel stressed that an unstated provision was relevant to the contract and necessary to give effect to the contractual objectives of the parties. If Justice Hall accepts counsel’s argument, how will she proceed?

Back 10

by giving effect to the parties’ aims by imposing implied terms

Front 11

What is the legal term given to a provision that is necessary to give effect to the contractual intentions of the parties?

Back 11

an implied term

Front 12

Which of the following allows a judge to imply terms in a contract in order to make it workable?

Back 12

the doctrine of business efficacy

Front 13

OrganicFoods Inc. enters into a contractual supply arrangement with EcoGrow Inc. EcoGrow contractually promises to supply two tons of organic carrots by May 1, providing carrots will be available. If EcoGrow does not supply the carrots as agreed, how will a court view EcoGrow’s obligation to OrganicFoods to do so?

Back 13

Business efficacy makes the obligation absolute.

Front 14

Nigel is the owner of a small drapery manufacturing business. He has several contracts with three fabric suppliers. Nigel believes the only obligations he owes to his suppliers are recited in the contracts. Under what circumstances would Nigel know immediately that his assumption was wrong?

Back 14

a situation whereby a supplier’s misconduct adversely affects his business interests

Front 15

What is a valid criticism of the common law with respect to the current application of an implied term of good faith by the courts when considering dealings between contractual parties?

Back 15

Opposing rulings create uncertainty, which is not the function of common law.

Front 16

A supplier and a retailer have a long, established relationship. Earlier contracts between them have always provided the standard “within 30 days of delivery” payment provision. A new contract between them makes no reference to payment terms. What would a court most likely rely on to arrive at a decision that payment is due within 30 days of delivery?

Back 16

past dealings

Front 17

Rumpel Lawn Care Inc. has had contractual relations with Rudy for many years. Rudy left a message asking Rumpel to include an organic weed inhibitor in the next lawn dressing mix applied to his lawn and to just add whatever charge there would be to his regular bill. What would you expect a risk manager is likely to advise Rumpel in this regard?

Back 17

to clarify the contractual relationship each time business is transacted

Front 18

In Glenko Enterprises Ltd. v. Ernie Keller Contractors Ltd., [1994] 10 W.W.R. 641 (Man. Q.B.), aff’d [1996] 5 W.W.R. 135 (Man C.A.), the court found in favour of the subcontractor plaintiff, stating interest was properly due on the outstanding account it was owed. Why did the court find in favour of the plaintiff?

Back 18

The defendant followed the industry practice of charging interest on its accounts.

Front 19

Sheps & Shaps LLP contracted to receive a weekly delivery of 10 cartons of 8 x 11 bond paper and 5 cartons of 11 x 14 bond paper. This Tuesday, however, their supplier delivered 15 cartons of 8 x 11 bond and 10 cartons of 8 x 14. The office manager refused to accept the delivery. Which source of law allows contractual terms regarding quantity to be imposed?

Back 19

the Sale of Goods Act

Front 20

What would a court have to find in order to require the judge to limit the scope of the court’s examination of the evidence to expressed contractual obligations?

Back 20

an entire contract clause

Front 21

What legislation would you need to rely on if you want to ensure that terms are implied in a contractual business arrangement?

Back 21

the Sale of Goods Act

Front 22

What is meant by the term “contractual quantum meruit”?

Back 22

as much as merited or deserved

Front 23

A court has been asked to determine what the express terms of a parties’ contract encompass, as well as their purpose in accordance with the parties’ intentions. What would most likely be constrained by the application of the parol evidence rule with respect to the contract?

Back 23

extraneous evidence

Front 24

The parol evidence rule prohibits the introduction of a specific type of evidence relating to the terms of a contract when the language used in that document is clear. What is the second condition required to invoke the parol evidence rule?

Back 24

The restriction of the contractual content to the document is intentional.

Front 25

What would have to be present in a contractual situation in order for a court to refuse to invoke the application of the parol evidence rule?

Back 25

an intentional partly oral and partly documented contract

Front 26

In what manner could you reasonably expect a court to apply the parol evidence rule when asked to interpret the meaning of a nebulous term in a written contract?

Back 26

Disregard the rule and allow extrinsic evidence to resolve the ambiguity.

Front 27

Kramer and Biff entered into a formal purchase and sale agreement with respect to Kramer’s house. Two weeks later, Biff revisited Kramer and offered to purchase all of Kramer’s custom yard and deck furniture too. The price Biff offered was $2500 more than the last offer Kramer had received, and he accepted the offer. In these circumstances, if a dispute ensues, will the parol evidence rule play a role?

Back 27

It will not play a role, owing to the distinct nature of the collateral contract and price.

Front 28

Under the UEEA, which of the following would immediately tell you that you have satisfied the best evidence rule with respect to an electronic record?

Back 28

proving the integrity of the electronic system that recorded the data

Front 29

Why would a businessperson use contractual terms as a planning feature of the law?

Back 29

to limit liability and shield against possible future events

Front 30

Which of the following is a distinguishing characteristic of the doctrine of frustration?

Back 30

As a guiding principle, it is used for interpreting the terms of a contract.

Front 31

Why should one NOT rely on the common law doctrine of frustration in contractual negotiations?

Back 31

the doctrine of frustration is an unreliable avenue of escape that operates in narrow circumstances.

Front 32

What would a negotiator most likely caution against with respect to the notion of building flexibility into contractual agreements?

Back 32

the risk of having no contract at all if the resulting document is too unfixed

Front 33

Marty has made his acceptance of an offer to purchase his house subject to his lawyer’s approval. Why did Marty’s lawyer advise him that it was essential for him to do so?

Back 33

to ensure contractual obligations Marty incurs are limited to certain circumstances

Front 34

What is the legal term given to a clause that allows the parties to reopen negotiations or terminate the contract if specified events occur?

Back 34

a condition precedent

Front 35

What is the legal term given to a clause that makes a contract enforceable against a buyer only if the buyer is able to secure a satisfactory building inspection?

Back 35

a condition subsequent

Front 36

Which of the following would automatically end a contract with a supplier if the buyer’s sales fall below a stated level?

Back 36

a condition subsequent

Front 37

Which of the following would establish a maximum level of liability for one of the parties if it commits a breach?

Back 37

a limitation of liability clause

Front 38

Which of the following would establish that damages of $10 000 will be payable by a supplier if it fails to deliver products to a retailer on time?

Back 38

a liquidated damages clause

Front 39

Which of the following would provide that a supplier will NOT be liable to a retailer if it is fails to deliver products to it on time?

Back 39

an exemption clause

Front 40

What must be present in order for a condition subsequent to be recognized as legally enforceable?

Back 40

sufficient detail; otherwise, the uncertain condition is unenforceable

Front 41

What type of contractual condition is the statement “I’ll buy your horse if he decides he likes me” an example of?

Back 41

an illusory condition precedent

Front 42

What principle could you reasonably expect Canadian common law courts to apply when faced by cases dealing with standard form contracts?

Back 42

Ambiguous terms should be construed against the party that prepared the contract.

Front 43

What is the term given to the guiding principles for interpreting the terms of a contract?

Back 43

The Rules of Construction

Front 44

Which of the following is characteristic of a shrink-wrap agreement?

Back 44

The effect of opening the package constitutes acceptance of the terms.

Front 45

In what way are a click-wrap agreement and a browse-wrap agreement different from one another?

Back 45

Notification prior to assent is required to enforce terms of a click-wrap agreement.