Question 1

A misrepresentation is

Accepted Answer

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

Question 2

A purchaser explains to his real estate agent that he wants to buy a house containing a suite that would generate rental income.The agent showed and sold to him a house with a basement suite.After taking possession of the house, the purchaser discovered that the previous owner had been renting the basement unlawfully.No permit to build the suite had been obtained, nor could it have been obtained because the ceiling was too low and the lot too small.It turned out that the agent knew about these legal requirements and knew that they had not been met.She said nothing.Is the law of misrepresentation actionable? Explain your reasoning.

Accepted Answer

Because the agent knew that the purchaser intended to use the basement to generate income and also knew that it was impossible to get a permit because of the low ceiling, the failure to disclose would likely be seen as a fraudulent misrepresentation.

Question 3

Which of the following best describes an implied term?

Accepted Answer

A) It is a statement expressed by one of the parties. 
B) It is sometimes inserted into a contract by a court. 
C) It cannot create an enforceable legal obligation. 
D) It can be used to rectify a mistake in a contractual document. 
E) It is always based on the standard in the industry that the parties are engaged in. 
A) It is a statement expressed by one of the parties. 
B) It is sometimes inserted into a contract by a court. 
C) It cannot create an enforceable legal obligation. 
D) It can be used to rectify a mistake in a contractual document. 
E) It is always based on the standard in the industry that the parties are engaged in. B

Question 4

An exception to the parol evidence rule may arise if

Accepted Answer

A) both parties want to rescind the contract. 
B) the plaintiff will not be able to successfully claim damages otherwise. 
C) the judge is convinced that the contract would be more effective if it contained additional terms. 
D) evidence from outside of the document is required for the purpose of rectifying a mistake in the document. 
E) the wording of the document is unfair to one of the parties. 
A) both parties want to rescind the contract. 
B) the plaintiff will not be able to successfully claim damages otherwise. 
C) the judge is convinced that the contract would be more effective if it contained additional terms. 
D) evidence from outside of the document is required for the purpose of rectifying a mistake in the document. 
E) the wording of the document is unfair to one of the parties.

Question 5

A pre-contractual representation

Accepted Answer

A) creates a legally enforceable obligation. 
B) is a promissory statement. 
C) will always induce a contract. 
D) is a voluntary agreement to do something in the future. 
E) can be made by words or conduct. 
A) creates a legally enforceable obligation. 
B) is a promissory statement. 
C) will always induce a contract. 
D) is a voluntary agreement to do something in the future. 
E) can be made by words or conduct.

Question 6

Denise is a farmer in Prince Edward Island.She recently purchased a new tractor from her local dealer.Although her contract of sale contains a large number of standard terms and conditions, it does not guarantee that the tractor would function properly, and it does not contain any exclusion clauses.Unfortunately, the tractor malfunctioned soon after it was delivered.Denise wants to sue for breach of contract.Which of the following is most likely to be TRUE?

Accepted Answer

A) Denise must fail unless an express term is breached. 
B) Denise must fail unless she signed a standard form contract. 
C) Denise will fail unless she can prove a collateral contract. 
D) Denise will fail no matter what. 
E) Denise will succeed on the basis of a term that implied by a statute governing the purchase and sale of goods. 
A) Denise must fail unless an express term is breached. 
B) Denise must fail unless she signed a standard form contract. 
C) Denise will fail unless she can prove a collateral contract. 
D) Denise will fail no matter what. 
E) Denise will succeed on the basis of a term that implied by a statute governing the purchase and sale of goods.

Question 7

Why do insurance contracts require a duty of utmost good faith?

Accepted Answer

The duty of utmost good faith arises bec

Question 8

Which of the following statements regarding boilerplate clauses is most likely to be TRUE?

Accepted Answer

A) The phrase "boilerplate clause" refers to the very strong and durable sheets of metal that were used to print newspapers in the first half of the twentieth century. 
B) A force majeure clause is used to indicate which of the two parties is the "major power" in the contract and therefore responsible for drafting the written agreement. 
C) The phrase "boilerplate clause" refers to the case in which the courts first approved of such contractual terms: Boilerplate Union 505 (New York) v T Malloy Inc. 
D) An "entire agreement clause" indicates that a contract contains only one promise by each of the parties. 
E) The phrase "boilerplate clause" refers to the fact that water constantly changes its shape when it is heated over a hot plate. 
A) The phrase "boilerplate clause" refers to the very strong and durable sheets of metal that were used to print newspapers in the first half of the twentieth century. 
B) A force majeure clause is used to indicate which of the two parties is the "major power" in the contract and therefore responsible for drafting the written agreement. 
C) The phrase "boilerplate clause" refers to the case in which the courts first approved of such contractual terms: Boilerplate Union 505 (New York) v T Malloy Inc. 
D) An "entire agreement clause" indicates that a contract contains only one promise by each of the parties. 
E) The phrase "boilerplate clause" refers to the fact that water constantly changes its shape when it is heated over a hot plate.

Question 9

Preetpal purchased a ticket to ride on a train from Toronto to Ottawa.After she had boarded the train, she was asked if she wished to place her outerwear and backpack into a storage unit on the train.Because she did not want to be encumbered during her journey, she accepted the offer.She was given a "small baggage claims" ticket before handing over her coat and belongings.When the train arrived in Ottawa, and Preetpal tried to collect her coat, she was told that it could not be found.When she threatened to sue, the person who was representing the train told Preetpal that the back of the "small baggage claims" ticket that she received contained a term that excluded liability for lost or stolen goods.Assuming these are the only exclusions, Preetpal can be bound by the exclusion clause only if

Accepted Answer

A) she actually read it. 
B) it was written in a font that was larger than the font that otherwise appeared on the ticket. 
C) the clause was written in a language that she can read. 
D) it was explained to her when she first bought her train ticket. 
E) she was given reasonable notice of the terms on the back of the ticket before or at the time that she received the ticket. 
A) she actually read it. 
B) it was written in a font that was larger than the font that otherwise appeared on the ticket. 
C) the clause was written in a language that she can read. 
D) it was explained to her when she first bought her train ticket. 
E) she was given reasonable notice of the terms on the back of the ticket before or at the time that she received the ticket.

Question 10

Restitution is always possible for any misrepresentation regardless of the circumstances.

Accepted Answer

A) True 
 B)False

Question 11

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 most likely to be TRUE?

Accepted Answer

A) 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. 
B) Rescission is not available for an innocent misrepresentation. 
C) 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. 
D) 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. 
E) The only legal remedy available to Asif is rescission. 
A) 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. 
B) Rescission is not available for an innocent misrepresentation. 
C) 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. 
D) 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. 
E) The only legal remedy available to Asif is rescission.

Question 12

Consumer protection laws in several jurisdictions including Manitoba, Northwest Territories, and the Yukon

Accepted Answer

A) make it a crime to sell used goods. 
B) make it a tort to sell used goods. 
C) imply a term in consumer transactions that goods being sold are new unless otherwise described. 
D) imply a term that goods being sold are used unless otherwise described. 
E) have been repealed. 
A) make it a crime to sell used goods. 
B) make it a tort to sell used goods. 
C) imply a term in consumer transactions that goods being sold are new unless otherwise described. 
D) imply a term that goods being sold are used unless otherwise described. 
E) have been repealed.

Question 13

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

Accepted Answer

Boilerplate provisions often allocate th

Question 14

Leilani purchased a business from Troy.She is now interested in the possibility of taking legal action on the basis of an alleged misrepresentation that occurred during the negotiations leading up to the contract.Which of the following statements is TRUE?

Accepted Answer

A) The contract can be rescinded only if Troy made a fraudulent misrepresentation. 
B) If Troy made a negligent misrepresentation, and if Troy owed a duty of care to Leilani in making that representation, Leilani may choose to sue in tort rather than rescind the contract. 
C) Because the courts will not punish a person who did not breach an obligation, rescission is not available if Troy merely made an innocent misrepresentation 
D) Because the purpose of rescission is to reverse the effects of a transaction, Leilani will not be able to receive court costs if she rescinds the agreement 
E) Leilani cannot obtain rescission because she can only sue in tort. 
A) The contract can be rescinded only if Troy made a fraudulent misrepresentation. 
B) If Troy made a negligent misrepresentation, and if Troy owed a duty of care to Leilani in making that representation, Leilani may choose to sue in tort rather than rescind the contract. 
C) Because the courts will not punish a person who did not breach an obligation, rescission is not available if Troy merely made an innocent misrepresentation 
D) Because the purpose of rescission is to reverse the effects of a transaction, Leilani will not be able to receive court costs if she rescinds the agreement 
E) Leilani cannot obtain rescission because she can only sue in tort.

Question 15

A person who investigates a condition or state of facts for themselves, rather than relying on a pre-contractual statement of the other side, will usually succeed in an action for misrepresentation whenever the investigation that they made turns out to be untrue.

Accepted Answer

A) True 
 B)False

Question 16

Diamond Dave decides to sell his donut franchise to Fast Freddie.Freddie has a number of questions about the receivables.Diamond Dave says that all of the answers to his questions can be found in the corporate ledger.Instead of inspecting the ledger, Fast Freddie hires an accounting firm to do a forensic audit of the business.Relying on the audit, Freddie buys the business.Which of the following explains why Freddie would fail to obtain rescission if he later decided he did not like the transaction?

Accepted Answer

A) Freddie affirmed Dave's misrepresentation. 
B) Freddie did not rely on the fraudulent misrepresentation that Dave made. 
C) Diamond Dave was not careless with his ledger, but by not conducting his own forensic audit Diamond Dave misled Freddie into thinking he needed to conduct a forensic audit; however, this was not the cause of Freddie's damages. 
D) Diamond Dave made an innocent misrepresentation, but it is impossible to restore the parties to their previous positions. 
E) Diamond Dave did not make any misrepresentation in any way, and Freddie relied entirely upon his own investigations. 
A) Freddie affirmed Dave's misrepresentation. 
B) Freddie did not rely on the fraudulent misrepresentation that Dave made. 
C) Diamond Dave was not careless with his ledger, but by not conducting his own forensic audit Diamond Dave misled Freddie into thinking he needed to conduct a forensic audit; however, this was not the cause of Freddie's damages. 
D) Diamond Dave made an innocent misrepresentation, but it is impossible to restore the parties to their previous positions. 
E) Diamond Dave did not make any misrepresentation in any way, and Freddie relied entirely upon his own investigations.

Question 17

An investor named Orson was trying to decide between entering the futures markets and creating a forward contract.His broker said, "I think I might have found a great opportunity for you, Orson.If events play out as I hope, this forward contract will earn you a lot of money." Orson took that advice, but the forward contract did not perform and Orson lost everything.What should Orson do?

Accepted Answer

A) Sue his broker for negligence. 
B) Sue his broker for misrepresentation. 
C) Sue his broker for deceit. 
D) Orson has no remedy; his broker was stating an opinion. 
E) Orson has no remedy; his broker was making a statement of future conduct. 
A) Sue his broker for negligence. 
B) Sue his broker for misrepresentation. 
C) Sue his broker for deceit. 
D) Orson has no remedy; his broker was stating an opinion. 
E) Orson has no remedy; his broker was making a statement of future conduct.

Question 18

What does it mean to say that a pre-contractual representation is NOT promissory in nature?

Accepted Answer

A statement that is promissory in nature

Question 19

Even if a lease does not expressly say that the item leased must come back in the same condition in which it went out (subject to reasonable wear and tear), a court will imply such a term.The court is most likely to do so on the basis that such a term

Accepted Answer

A) was clearly intended by both parties. 
B) was required as a matter of law. 
C) would improve the contract. 
D) reflects standard practice within the industry, such as heavy equipment rentals, that the parties created their contract. 
E) is found in some leases. 
A) was clearly intended by both parties. 
B) was required as a matter of law. 
C) would improve the contract. 
D) reflects standard practice within the industry, such as heavy equipment rentals, that the parties created their contract. 
E) is found in some leases.

Question 20

Because he was considering buying Susanne's car, Logan asked two questions: (a) Does the car have new tires? (b) Has the car suffered any structural damage? Susanne answered the first question immediately and truthfully, but she was unsure of the second answer.She therefore told Logan that she would have it inspected would get back to him regarding the second question.Over the next few days, however, Susanne forgot about the inspection.When Logan called to ask about structural damage, she simply lied and said that the inspector told her that the car was in perfect condition.Logan then bought the car.If it turns out that the car did have structural damage before the sale, which of the following statements is most likely to be TRUE?

Accepted Answer

A) At most, Susanne may have to take the car back and return Logan's money. 
B) Logan is stuck with the car. 
C) Susanne may be entitled to get the car back even if Logan wants to keep it. 
D) Susanne may be sued for damages in tort. 
E) Susanne has committed innocent misrepresentation. 
A) At most, Susanne may have to take the car back and return Logan's money. 
B) Logan is stuck with the car. 
C) Susanne may be entitled to get the car back even if Logan wants to keep it. 
D) Susanne may be sued for damages in tort. 
E) Susanne has committed innocent misrepresentation.

Exam 9: Representations and Terms

A misrepresentation is

Which of the following best describes an implied term?

An exception to the parol evidence rule may arise if

A pre-contractual representation

Why do insurance contracts require a duty of utmost good faith?

Which of the following statements regarding boilerplate clauses is most likely to be TRUE?

Restitution is always possible for any misrepresentation regardless of the circumstances.

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 most likely to be TRUE?

Consumer protection laws in several jurisdictions including Manitoba, Northwest Territories, and the Yukon

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

Leilani purchased a business from Troy.She is now interested in the possibility of taking legal action on the basis of an alleged misrepresentation that occurred during the negotiations leading up to the contract.Which of the following statements is TRUE?

A person who investigates a condition or state of facts for themselves, rather than relying on a pre-contractual statement of the other side, will usually succeed in an action for misrepresentation whenever the investigation that they made turns out to be untrue.

What does it mean to say that a pre-contractual representation is NOT promissory in nature?

Even if a lease does not expressly say that the item leased must come back in the same condition in which it went out (subject to reasonable wear and tear), a court will imply such a term.The court is most likely to do so on the basis that such a term

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

Real Property: Interests and Leases

Real Property: Sales and Mortgages

Personal Property: Bailment and Insurance

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

Online: Special Contracts: Negotiable Instruments

Filters