Exam 10: Contractual Defects

Explain the distinction between the effects of a mistake that prevents the creation of a contract and a mistake that renders the purpose of a contract impossible. Provide an example of each.

Which of the following is LEAST LIKELY to be understood by a court as a contract for the sale of an interest in land?

Raja set up a web site selling tee shirts decorated with original artwork. The web site was marketed under a name very similar to a well- known professional basketball team. Raja had never heard of the team nor had he meant to fool anyone or to infringe anyone's trademark. One day, Liz went to Raja's site and bought a number of tee shirts with her credit card. Thinking that she was getting fan apparel from her favorite ball team, Liz was quite surprised and disappointed when she saw the merchandise that she received in the mail. What should she claim in order to get her money back?

Lawrence and Jane were hammering out a deal over cocktails. Jane thought that Lawrence was totally plastered and was hoping to take advantage of this in their negotiation of the terms. However, Lawrence knew exactly what he was doing. Although quite tipsy, he pretended to be staggering drunk. His plan was to make two deals: one deal that was good for him, the other a bad one. This way he could complete the deal that was to his advantage and, later, walk away from his obligations on the second deal. Which of the following is TRUE?

Constance and Rosemary are in a fiduciary relationship. This fact is relevant to a claim of unfairness during bargaining because

Duress is distinguishable from undue influence in that

An unconscionable transaction is

Economic duress

The reason contracts for necessaries are enforceable is to ensure that minors do not avoid contracts with suppliers for perishable goods.

Common law illegality

The difference between a guarantee and an indemnity is that

From the perspective of risk management, what practices should be adopted by businesses transacting in jurisdictions that have a Statute of Frauds?

Tandindar was holding a shipment of goods that belonged to Todd and threatened not to release them unless he agreed to sign a contract to buy two more shipments over five years. This is an instance of economic duress.

A fiduciary relationship

Across Canada, the age of majority is 19.

Cy and Kelly negotiate the sale of "Indian Art" over the Internet. Because of an electronic miscommunication, Cy thinks he is buying art from Calcutta. But it turns out upon delivery that Kelly was selling Inuit art all along. Because the mistake was material and prevented the creation of a shared contractual intent, Cy will be able to claim the contract was defective.

Napolean wanted to borrow money from the Bank of Winnipeg. The bank was not, however, fully convinced that Napolean would be able to repay the debt. It therefore wanted some assurance from Napolean's mother, Josephine, that she would repay the loan if necessary. Which of the following statements is most likely to be TRUE?

The form and content requirements of the Statute of Frauds requires a signature from each of the parties.

Elsa is a member of an active neighbourhood association. The association runs frequent community events, issues a monthly newsletter to residents, lobbies municipal government, and engages in fundraising. Recently, they have decided to create a staff position to coordinate their efforts. Their advisory committee has been discussing whether or not to incorporate. Outline how the association's ability to enter contracts in conducting its activities might impact its decision about incorporation.

Charlie has bi- polar disorder (also known as manic- depression). Usually, medication helps to control her disorder. Lately, Charlie stopped taking her medication and started drinking heavily. During a manic (up) phase, she dressed in an elegant suit, went to a BMW dealership and signed a contract for the purchase of a new sports car. She financed the transaction by putting a large deposit on her credit card, and drove the car off the lot that same day. Charlie's family became very concerned. Describe the law as it pertains to Charlie's capacity to contract. What should Charlie do? What should the car dealer do?