Exam 9: Representations and Terms

Which of the following statements is TRUE with respect to a contractual clause that protects one party from the consequences of breach (exclusion or limitation of liability clauses)?

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?

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

Ejay wants a court to consider oral evidence about a written contract in order to resolve a dispute about an ambiguous term in one of her client's contracts.She decides that she will characterize the facts as giving rise to a collateral contract.Which of the following is TRUE?

Samuel and Ben are negotiating the sale of a sailboat.Samuel expresses an interest in the boat but emails Ben a list of five questions that he wants answered before agreeing to purchase it.Ben responds with full answers to four of the questions.Samuel emails back and says he will buy the boat on Saturday as long as his remaining question (about the state of its hull) checks out okay.Ben promises to check with his boat mechanic and respond before they are scheduled to meet on Saturday.Both men get busy.Ben checks with his mechanic but innocently forgets to report back to Samuel that there is a crack in the hull.Samuel forgets that there was one question outstanding.Saturday comes and the transaction takes place.If it turns out that there is a significant problem with the hull of the boat, which of the following is TRUE?

Cavell is selling his CD burner to an acquaintance.Cavell knows that the CD burner has a defect, generating CDs that skip.The acquaintance asks Cavell for his opinion of the machine just before the purchase is to take place.All Cavell says is "I personally like it, but I am not too picky about quality.You should try the machine out before you buy it." Cavell has made a misrepresentation about the quality of the machine.

Steve, Sheryl's doctor, is selling some of the artwork from his office.Sheryl says she has always been interested in his Thomson piece and asks how much he wants for it.Although the painting is not actually a Thomson original, Steve knows which one she means and tells her that he paid $3000 but will take $1000.(That much is true, but he doesn't say anything at all to indicate that it is NOT a Thomson original).By his silence, Steve has engaged in actionable misrepresentation.

"It is imperative that all business contracts be in writing." Assess this statement.Is it accurate from a legal perspective? It is accurate from the perspective of risk management? Explain your reasoning.

Justice Howe, a member of the Supreme Court of Canada, is deciding a case that deals with a complicated commercial agreement between two sophisticated and experienced companies.The resolution of the case depends upon the interpretation of several clauses in that agreement.Which of the following statements is TRUE?

Parol evidence cannot be used to resolve ambiguous terms of a written contract.

The proof of a collateral contract not in contradiction to the written contract is an exception to the parol evidence rule.

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 travelling within Canada.Concerned that she would not be covered, as soon as the plane landed Jane used her cellphone 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 United States, will the exclusion clause prevent her from making a successful claim?

A contractual term

Pre-contractual representations are always part of the terms of all contracts.

Jacqui purchased a business from Dickie.During the pre-contractual negotiations, Dickie said that the business' records indicate that it earns a least $1 000 000 each and every year.That statement was true when it was made.However, a short time later, but before the contract was signed, Dickie learned that the manufacturer that supplied his business with the materials that it needed was going out of business.Dickie realized that the need to obtain supplies from another manufacturer would reduce the profitability of the business.Whether he or Jacqui was in charge, the business would earn only $700 000 per year.Afraid that the new information news would scare off Jacqui, Dickie decided to keep it to himself.Jacqui completed the purchase of Dickie's business, but was very disappointed when it earned only $700 000 in its first year.She now wants to sue Dickie.Which of the following statements is most likely to be TRUE?

Standard form agreements

Nate wanted to rent a car.The attendant gave him a standard form agreement to sign.She asked him to sign three places.She indicated that his signatures were concerned with exclusion clauses, but she did not explain the content of those clauses.Nate signed without anything else being said.If Nate breeches one of these exclusion clauses, which of the following is most likely to be TRUE?

Reeni was interested in purchasing a car.After searching the classified ads, she found a car in which she was interested, being sold by Ethan, whom she had never met.Ethan knew that his car was in need of new tires, a new muffler, and would soon need a new clutch and a brake job.Consequently, he was hoping that, when they met, Reeni would not ask too many questions.When she wanted to go for a test drive, Ethan gave her the keys and said that he trusted her to go alone and that doing so would allow her to test it in a less inhibited fashion.Really, he just did not want her to ask about any of the car's problems.Reeni took the car by herself and, on the basis of its performance, bought it at Ethan's listed price, no questions asked.Which of the following statements is most likely to be TRUE?

Parol evidence is not admissible to

The possible consequences of actionable misrepresentation include