Law Ch 8

Front 1

What exerts the greatest influence on the law’s focus on the enforcement of a contract after negotiations are complete and the formal contract is executed?

Back 1

the preservation of the integrity, predictability, and reliability of contractual relationships

Front 2

Which of the following would immediately let you know that a contract contains an element that would cause a court to hold that the contract is unenforceable?

Back 2

an auxiliary mistake concerning the contract

Front 3

While negotiating a commercial agreement, Juan made a misrepresentation that goes to the heart of the ensuing formal contract between the parties. How do you think the other party to the contract will act, once it becomes aware of the misrepresentation?

Back 3

The other party may opt to enforce the contract or have it set aside.

Front 4

What is the definition of the legal term “voidable contract”?

Back 4

a contract that allows an aggrieved party to choose to keep it in force or bring to an end

Front 5

In what way is a void contract different from a voidable contract?

Back 5

A void contract contains a defect so substantial that it is of no force or effect.

Front 6

Why is it necessary for Canadian law to grant children and mentally ill individuals special legal protection?

Back 6

Both groups lack the legal capacity to be able to enter into binding contracts.

Front 7

What are the elements of importance emphasized by contract law as it pertains to the legal capacity to form contracts?

Back 7

consent and voluntariness

Front 8

Which of the following would affect the status of a contract entered into by a minor upon that individual attaining the age of majority?

Back 8

The contract is ratified after attaining legal capacity.

Front 9

Cory, aged 17, plays hockey under contract with the Northern Manitoba Huskies junior hockey team. What is the legal term given to this particular type of contractual arrangement?

Back 9

beneficial contract of service

Front 10

A sales representative knowingly entered into a contract for an alarm system during a door-to-door sales campaign with an obviously mentally ill individual. Why could the contract be immediately rendered voidable at that individual customer’s request?

Back 10

Establishing true consent is not possible due to the individual’s incapacity to grasp the essence and effect of the contract.

Front 11

Even though Dalbert knew Rahim had consumed copious amounts of alcohol during the afternoon, both signed a contract written on a napkin whereby Rahim agreed to buy Dalbert’s old car for top dollar. Upon regaining his legal capacity, if Rahim opts to repudiate the contract on the basis of an improvident agreement, how must he proceed to void the contract?

Back 11

He must claim relief due to unconscionability.

Front 12

In contract law, the presence of which of the following elements would immediately alert a court to the possibility that an agreement may be voidable due to duress?

Back 12

The use of a threat of physical harm results in a contract.

Front 13

In the case of Bank of Montreal v. Duguid (2000), 47 O.R. (3d) 737 (C.A.), the court was asked to consider whether a wife who had signed a guarantee on a loan for her husband’s business was entitled to be released from the guarantee on the basis of undue influence exerted by her husband. Why did the majority of the court find that the guarantee was enforceable against the wife?

Back 13

because the wife was a real estate agent and presumably knowledgeable enough to not be unduly influenced by her husband to sign the guarantee

Front 14

In the case of Atlas Supply Co of Canada v. Yarmouth Equipment (1991), 103 NSR (2d) 1 (CA), the court considered whether a franchise agreement was unconscionable and therefore unenforceable because financial projections given by the franchisor were overly optimistic. Why did the court find that the contract was unconscionable?

Back 14

because the franchisor gave misleading financial information and withheld contrary information

Front 15

What is the definition of “undue influence” with respect to contractual relationships?

Back 15

unfair manipulation that compromises someone’s free will

Front 16

Holding a gun to someone’s head to induce them to enter a contract exemplifies which of the following legally exceptional circumstances?

Back 16

undue influence resulting from actual pressure

Front 17

How will a court that hears a matter involving one party allegedly taking advantage of another party’s unsophistication in relation to commercial matters arrive at a determination as to whether such an advantage actually existed?

Back 17

The more powerful party must prove the absence of the presumed pressure.

Front 18

Where circumstances surrounding a proposed commercial transaction involve an unsophisticated party, what would a court most likely accept as undisputable evidence that that party has proceeded with the transaction on a free and informed basis?

Back 18

a certificate of independent legal advice

Front 19

The case of Atlas Supply Co. of Canada v.Yarmouth Equipment (1991), 103 N.S.R. (2d) 1 (N.S.C.A.) disallowed the reliance on the defendant’s exclusion clauses to prevent evidence of the plaintiff’s reliance on misleading information provided by the defendant. The dissenting appellant court judge cautioned against setting aside business deals such as this one. What was the dissenting appellant court judge advocating by taking this position?

Back 19

that the acceptance of bad faith misrepresentations is a legal commercial negotiating practice

Front 20

In recent Alberta and Ontario appellant court decisions, the courts have regarded unconscionability as involving a four-step procedure. Which of the following will a judge now recognize as an additional step to be considered over and above the traditional two-step procedure?

Back 20

imbalance in bargaining power due to ignorance of the language of the bargain

Front 21

Most provincial jurisdictions in Canada have enacted legislation to provide a form of protection to consumers by setting unconscionability as a standard for the assessment of fairness of the bargain. What element of this legislation is most similar to elements addressed in separate, related consumer loan protection legislation?

Back 21

The price grossly exceeded the price for similar, readily available goods or services.

Front 22

How is a wilful omission with regard to relevant information during pre-contractual negotiations regarded in law?

Back 22

as a breach of the duty to disclose information without being prompted

Front 23

Johan is negotiating the possible sale of one of his company’s regional business operations to Bill. In response to Bill’s inquiry regarding the duration remaining on the existing supply contracts, Johan provided the end dates of the contracts themselves. Johan did not advise Bill that two of the customers were on the brink of insolvency. If Bill relies on the information Johan provided, what recourse will contract law allow him?

Back 23

Partial provision of information allows the contract to be rescinded.

Front 24

What criteria must be satisfied in order for a misrepresentation to be actionable?

Back 24

the misrepresentation must be material to the contract

Front 25

A seller unknowingly made a misrepresentation during negotiations to sell his car. Now that the seller is aware of the misrepresentation and the prospective buyer is returning to make an offer, what recourse is available to rectify the situation and accept the offer without risking an ensuing lawsuit?

Back 25

The seller must attend to the prompt disclosure of the correct facts to the prospective buyer.

Front 26

What is the goal of the common law remedy of rescission?

Back 26

It seeks to return parties to their pre-contractual positions.

Front 27

What categories of actionable misrepresentations entitle an innocent party to a common law remedy in damages?

Back 27

fraudulent and negligent misrepresentation

Front 28

What is the legal definition of “mistake”?

Back 28

an error made by one or both parties that seriously undermines a contract

Front 29

How does the common law classify a situation in which both parties to an agreement have shared the same fundamental mistake in order to provide a remedy?

Back 29

as a common mistake

Front 30

Which of the following forms the basis of a common argument for setting aside a contract based on mistake that will rarely succeed in Canadian courts?

Back 30

misunderstanding of the nature or type of contract signed by the party

Front 31

Under the classic model of illegality, a freely chosen contract will be held unenforceable by a court in which of the following circumstances?

Back 31

if it is contrary to public policy and, or the doctrine of illegality

Front 32

A judge has determined that offending portions of a contract can be severed and the remaining portions saved. What type of common law contractual infraction is this judge resolving?

Back 32

an illegal contract

Front 33

Why are contracts that unduly interfere with the ability to earn a livelihood or reduce competition generally unenforceable in common law?

Back 33

They are contrary to the community’s common sense and common conscience.

Front 34

Which of the following elements would a court consider when determining the enforceability of a non-competition clause on the grounds of reasonableness?

Back 34

the reasonableness of location and time restrictions

Front 35

Why did the Supreme Court of Canada, in 2009, expressly reaffirm that restrictive covenants in the sale of a business are subject to less scrutiny than other applications of restrictive covenants?

Back 35

because the vendor typically receives consideration for goodwill

Front 36

In a recent 2009 ruling, the Supreme Court of Canada found it necessary to direct that judges in lower courts were prohibited from redrafting overly broad non-competition clauses to make them legal and enforceable, stating that such clauses are simply and utterly unenforceable. Why did the Supreme Court find it necessary to invoke this prohibition?

Back 36

because such clauses improperly bind employees unable to afford litigation costs

Front 37

What was the intended purpose of the creation and enactment of the Statute of Frauds?

Back 37

to impede perjury and fraud by documented evidence of specified types of contracts

Front 38

What is the legal definition of a “guarantee”?

Back 38

a pledge to pay another’s liability in the event of default of such duty

Front 39

What had the greatest influence on the early courts in Britain with respect to their inclusion of a provision in the Statute of Frauds requiring contracts that were to be performed after the passage of one year’s time to be evidenced in writing?

Back 39

to avoid difficulties presented by the passage of time with proving past oral promises

Front 40

Which of the following is a valid requirement under the federal Secure Electronic Signature Regulations issued in 2005?

Back 40

to ensure alterations to a document after it was signed can be evidenced

Front 41

Which of the following would be a valid provision under the various provincial acts dealing with the sale of goods?

Back 41

If partial payment or acceptance is made by the buyer, an oral contract is enforceable.