Question 1

Negligent misrepresentation occurs when a person is reckless.

Accepted Answer

A) True 
 B)False  False

Question 2

Jane was at the international terminal of the airport when she realized that she had forgotten to purchase travel insurance for her trip. After checking- in early, Jane was browsing at some of the shops and happened upon a vending machine selling travel insurance. On the outside of the machine was a sign that indicated "Full coverage for $2 per day." Jane plugged in three toonies to cover herself for the weekend. Out from the machine dropped a standard form agreement. After boarding the plane, Jane examined the fine print and noticed that the coverage was limited to travel within Canada. Like every other potential customer in the international terminal of the airport, Jane was not traveling within Canada. Concerned that she would not be covered, as soon as the plane landed Jane used her cell phone to dial the 1- 800 number on the back of the printed form. All she got was a recorded message. If Jane got injured while traveling in the US, will the exclusion clause prevent her from making a successful claim?

Accepted Answer

As the machine represented that the policy provided "full coverage," the term on the actual policy limiting coverage to Canada was onerous and unusual. This term was even more of a surprise when one considers that the vending machine was situated in a terminal where no one was traveling within Canada. Following the Tilden case, a party that seeks to enforce onerous and unusual terms must bring such terms to the attention of the party at the time the contract is created. A failure to do so will render such terms unenforceable. In this case, there was no one to bring the terms to Jane's attention. Because the transaction was automated, the contract was completed long before Jane ever had a chance to read the terms and conditions. Given that the only term Jane was given notice of at the time she entered into the contract was that she would be provided with full coverage, it is unlikely that a court would enforce the exclusion clause. The exclusion clause therefore will not prevent Jane from making a successful claim.

Question 3

A misrepresentation is

Accepted Answer

A)  a kind of mistake. 
B)  an opinion that turns out to be untrue. 
C)  actionable if it induces a contract by misdescribing another's future action. 
D)  actionable if it induces a contract by falsely characterizing the consequences of a law. 
E)  actionable whenever it turns out to be false. 
A)  a kind of mistake. 
B)  an opinion that turns out to be untrue. 
C)  actionable if it induces a contract by misdescribing another's future action. 
D)  actionable if it induces a contract by falsely characterizing the consequences of a law. 
E)  actionable whenever it turns out to be false. D

Question 4

A court will find an implied term

Accepted Answer

A)  in order to rewrite the contract so that it is a better deal. 
B)  only if the parties had expressed it but forgot to write it down. 
C)  only if a statute tells it to. 
D)  when it is necessary to bring the contract in line with the presumed intentions of the parties. 
E)  whenever it wants. 
A)  in order to rewrite the contract so that it is a better deal. 
B)  only if the parties had expressed it but forgot to write it down. 
C)  only if a statute tells it to. 
D)  when it is necessary to bring the contract in line with the presumed intentions of the parties. 
E)  whenever it wants.

Question 5

An exception to the parol evidence rule may arise if

Accepted Answer

A)  both parties want to rescind the contract. 
B)  additional information is required in order to rectify a mistake. 
C)  the plaintiff will not be able to successfully claim damages otherwise. 
D)  the judge is convinced that the contract would be more effective if it contained additional terms. 
E)  none of the above. 
A)  both parties want to rescind the contract. 
B)  additional information is required in order to rectify a mistake. 
C)  the plaintiff will not be able to successfully claim damages otherwise. 
D)  the judge is convinced that the contract would be more effective if it contained additional terms. 
E)  none of the above.

Question 6

The golden rule always requires an adoption of the contextual approach to contractual interpretation.

Accepted Answer

A) True 
 B)False

Question 7

In order to get Susannah to buy his cottage, Paul tells her that he has recently spent $100 000 in repairs that make its foundations flawless. In love with the cottage and in reliance on Paul's representation, Susannah impulsively trades her condo in the city for the cottage without asking for a home inspection. Two months after she moves into the cottage, Susannah hears a creaking noise during a windy evening. The next morning, she has a home inspector over to take a look. He tells her that there have been no repairs on the house in the last twenty years and that the foundation is in a dangerous state of disrepair. She calls Paul to try to get her condo back but finds out that he has sold the unit and has moved to Bermuda with all of his assets. In seeking an order for restitution,

Accepted Answer

A)  Susannah will most likely fail because courts are unlikely to grant rescission when the rights of third parties are affected. 
B)  Susannah will most likely succeed, as Paul's misrepresentation is clearly actionable. 
C)  Susannah will most likely fail because her living in the cottage for two months is an affirmation of Paul's misrepresentation. 
D)  Susannah will most likely succeed, and the court will therefore award damages for breach of contract. 
E)  Susannah will most likely fail, as Paul's misrepresentation is clearly not actionable. 
A)  Susannah will most likely fail because courts are unlikely to grant rescission when the rights of third parties are affected. 
B)  Susannah will most likely succeed, as Paul's misrepresentation is clearly actionable. 
C)  Susannah will most likely fail because her living in the cottage for two months is an affirmation of Paul's misrepresentation. 
D)  Susannah will most likely succeed, and the court will therefore award damages for breach of contract. 
E)  Susannah will most likely fail, as Paul's misrepresentation is clearly not actionable.

Question 8

Zhou listed a commercial lot for sale, describing the land as being zoned for commercial/residential occupation. Dalvi, who was looking to build a funky billiards bar with condos above, inquired about Zhou's lot. Throughout their negotiations Zhou maintained that the law would allow the purchaser to use the lot for both commercial and residential purposes, and understood that the consequences of the zoning law were critical to Dalvi's business plan. Induced by this, Dalvi subsequently decided to buy the property. After buying the property, Dalvi learned that the land was not zoned as residential and that he was not permitted to build condos above the billiards bar. He sued Zhou, arguing that the inducing statement was actionable as misrepresentation. Will Dalvi succeed in his action? Why?

Accepted Answer

Because everyone is presumed to know the

Question 9

When will silence distort a previous assertion?

Accepted Answer

A)  when a half- truth is told 
B)  whenever a change in circumstances occurs 
C)  when a statutory provision requires disclosure 
D)  whenever a change in circumstances does not affect the accuracy of a representation 
E)  when a contract requires a duty of utmost good faith 
A)  when a half- truth is told 
B)  whenever a change in circumstances occurs 
C)  when a statutory provision requires disclosure 
D)  whenever a change in circumstances does not affect the accuracy of a representation 
E)  when a contract requires a duty of utmost good faith

Question 10

Asif purchased a business from Olga. During negotiations leading up to the contract, Olga made an innocent misrepresentation. As a result of that statement, Asif has discovered that the business is far less valuable than he expected. Which of the following statements is TRUE?

Accepted Answer

A)  Asif is entitled to rescission even if, before entering into the contract, he investigated the true state of affairs that Olga addressed in her innocent misrepresentation. 
B)  Asif is not entitled to rescind the contract if, before entering into the contract, he carelessly failed to discover the error contained in Olga's innocent misrepresentation. 
C)  Asif is not entitled to rescission unless he can prove that Olga's innocent misrepresentation was the only, or at least the most important, reason for him entering into the contract. 
D)  Rescission is not available for an innocent misrepresentation. 
E)  none of the above 
A)  Asif is entitled to rescission even if, before entering into the contract, he investigated the true state of affairs that Olga addressed in her innocent misrepresentation. 
B)  Asif is not entitled to rescind the contract if, before entering into the contract, he carelessly failed to discover the error contained in Olga's innocent misrepresentation. 
C)  Asif is not entitled to rescission unless he can prove that Olga's innocent misrepresentation was the only, or at least the most important, reason for him entering into the contract. 
D)  Rescission is not available for an innocent misrepresentation. 
E)  none of the above

Question 11

Standard form agreements

Accepted Answer

A)  are rarely offered on a take- it- or- leave- it basis. 
B)  always balance the interests of both parties. 
C)  often are more time- consuming than negotiating the terms of a new contract. 
D)  often contain language that has been refined and tested over the years. 
E)  all of the above 
A)  are rarely offered on a take- it- or- leave- it basis. 
B)  always balance the interests of both parties. 
C)  often are more time- consuming than negotiating the terms of a new contract. 
D)  often contain language that has been refined and tested over the years. 
E)  all of the above

Question 12

Pre- contractual representations can result in an action for breach of contract.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT an example of a disclosure required by statute?

Accepted Answer

A)  disclosure of significant liabilities that exist when making a domestic contract 
B)  disclosure of material facts pertaining to the sale of securities 
C)  disclosure of material facts by a financial officer of a corporation 
D)  disclosure of a serious medical condition when obtaining life insurance 
E)  disclosure of material facts by an accountant when she sells her car to a client 
A)  disclosure of significant liabilities that exist when making a domestic contract 
B)  disclosure of material facts pertaining to the sale of securities 
C)  disclosure of material facts by a financial officer of a corporation 
D)  disclosure of a serious medical condition when obtaining life insurance 
E)  disclosure of material facts by an accountant when she sells her car to a client

Question 14

Damages for actionable misrepresentation are not available in the domain of contract law.

Accepted Answer

A) True 
 B)False

Question 15

Restitution is always possible.

Accepted Answer

A) True 
 B)False

Question 16

A ticket contract is

Accepted Answer

A)  enforceable only if the terms on the back of the ticket are initialed by the customer. 
B)  never enforceable. 
C)  enforceable only if the terms on the back of the ticket have actually been read by the customer. 
D)  enforceable only if the terms are clear and reasonable notice of the terms was given when the contract was made. 
E)  enforceable only if the customer knew about the terms on the back of the ticket. 
A)  enforceable only if the terms on the back of the ticket are initialed by the customer. 
B)  never enforceable. 
C)  enforceable only if the terms on the back of the ticket have actually been read by the customer. 
D)  enforceable only if the terms are clear and reasonable notice of the terms was given when the contract was made. 
E)  enforceable only if the customer knew about the terms on the back of the ticket.

Question 17

Why are boilerplate provisions of potential value to businesses generating standard form agreements?

Accepted Answer

Boilerplate provisions often allocate th

Question 18

Asha sells bottled spring water. Unlike other water vendors who purify their water, Asha is marketing her product to those who want to drink spring water in its natural state. Although her water source is pure and clean, she is concerned that some consumers might have allergic reactions to trace elements in the unpurified water, so she designs a clause to exclude her company from liability. The clause indicates that, by opening and drinking the water, consumers are indicating that they have read and understood the warning that the water has not been purified and, as such, waive all liability for any allergic reactions resulting from drinking the water.Which of the following is most likely TRUE of Asha's strategy?

Accepted Answer

A)  It will succeed as long as the label on the bottle constitutes reasonable notice of the exclusion clause. 
B)  It will only succeed if the distributor personally points out to the consumer that by drinking the water they are waiving their right to sue. 
C)  Reasonable notice by itself is insufficient. The exclusion clause must also be written in clear and unambiguous language. 
D)  It will fail because it is never possible to exclude tort liability by way of contract. 
E)  none of the above 
A)  It will succeed as long as the label on the bottle constitutes reasonable notice of the exclusion clause. 
B)  It will only succeed if the distributor personally points out to the consumer that by drinking the water they are waiving their right to sue. 
C)  Reasonable notice by itself is insufficient. The exclusion clause must also be written in clear and unambiguous language. 
D)  It will fail because it is never possible to exclude tort liability by way of contract. 
E)  none of the above

Question 19

Ranjit purchased a complex computer system from Compu- Less. Although Compu- Less had specially manufactured the computer to Ranjit's personal specifications, the sale was created on the basis of a standard form agreement that the company uses when customers buy mass- produced computer units. A dispute has now arisen between Ranjit and Compu- Less. Which of the following statements is TRUE?

Accepted Answer

A)  The strict terms of the contract will not be enforced if, before Ranjit signed the agreement, the company's sales manager said, "Don't worry about the legal mumbo- jumbo. We stand behind our products." 
B)  The golden rule of interpretation states that an ambiguous term must be interpreted in the way that most benefits the party that did not draft the contract. 
C)  As long as the language of the contract is sufficiently clear, the parties may have excluded all possible statutory conditions and warranties. 
D)  because of the parol evidence rule, the parties' contract will not include the warranties contained in the Sale of Goods Act unless the contract either repeats those warranties or at least refers to them 
E)  The court may refuse to add an implied term to the contract even if that term would make the contract much better. 
A)  The strict terms of the contract will not be enforced if, before Ranjit signed the agreement, the company's sales manager said, "Don't worry about the legal mumbo- jumbo. We stand behind our products." 
B)  The golden rule of interpretation states that an ambiguous term must be interpreted in the way that most benefits the party that did not draft the contract. 
C)  As long as the language of the contract is sufficiently clear, the parties may have excluded all possible statutory conditions and warranties. 
D)  because of the parol evidence rule, the parties' contract will not include the warranties contained in the Sale of Goods Act unless the contract either repeats those warranties or at least refers to them 
E)  The court may refuse to add an implied term to the contract even if that term would make the contract much better.

Question 20

Denise is a farmer in Prince Edward Island. Recently she purchased a new tractor from her local dealer. Although her contract of sale contained a large number of standard terms and conditions, it did not guarantee that the tractor would function properly. Assume that the tractor malfunctions and Denise tries to sue for breach of contract. Which of the following is most likely TRUE?

Accepted Answer

A)  Denise would fail because no term in the contract was breached. 
B)  Denise would fail no matter what. 
C)  Denise would fail unless she was able to prove a collateral contract. 
D)  Denise would fail unless the court was willing to imply a term. 
E)  none of the above 
A)  Denise would fail because no term in the contract was breached. 
B)  Denise would fail no matter what. 
C)  Denise would fail unless she was able to prove a collateral contract. 
D)  Denise would fail unless the court was willing to imply a term. 
E)  none of the above

Exam 9: Representations and Terms

Negligent misrepresentation occurs when a person is reckless.

A misrepresentation is

A court will find an implied term

An exception to the parol evidence rule may arise if

The golden rule always requires an adoption of the contextual approach to contractual interpretation.

When will silence distort a previous assertion?

Asif purchased a business from Olga. During negotiations leading up to the contract, Olga made an innocent misrepresentation. As a result of that statement, Asif has discovered that the business is far less valuable than he expected. Which of the following statements is TRUE?

Standard form agreements

Pre- contractual representations can result in an action for breach of contract.

Which of the following is NOT an example of a disclosure required by statute?

Damages for actionable misrepresentation are not available in the domain of contract law.

Restitution is always possible.

A ticket contract is

Why are boilerplate provisions of potential value to businesses generating standard form agreements?

Risk Management and Sources of Law

Litigation and Alternative Dispute Resolution

Introduction to Torts

Intentional Torts

Miscellaneous Torts Affecting Business

Negligence

The Nature and Creation of Contracts

Consideration and Privity

Contractual Defects

Discharge and Breach

Contractual Remedies

Special Contracts: Sale of Goods

Special Contracts: Negotiable Instruments

Real Property: Interests and Leases

Real Property: Sales and Mortgages

Personal Property: Bailment and Insurance

Knowledge-Based Businesses and Intellectual Property

Electronic Commerce

Agency and Other Methods of Carrying on Business

Basic Forms of Business Organizations

Legal Rules for Corporate Governance

Secured Transactions

Dealing With Bankruptcy and Insolvency

Government Regulation of Business

Individual Employment

Organized Labour

Doing Business in a Global Economy

Filters