Exam 7: The Nature and Creation of Contracts

Eric bought a house for $150 000.He paid $25 000 immediately and promised the seller that he would pay the remainder in monthly installments over the next 10 years.Eric then told his daughter,Naomi,that he would transfer the house to her if and when she paid all of the monthly payments.Naomi was reluctant to commit herself to that arrangement because she was not sure if she would always have enough money to make the payments.Eric said to her,"Well,let's see how it goes." Naomi made the monthly payments for six years.Unfortunately,she and her father then began to fight.At that point,he told her that the deal was off.Eric has offered to repay Naomi for all of the payments that she had made,but he insists that the house will always belong to him.The market value of the house has recently and unexpectedly increased from $150 000 to $400000.Which of the following statements is most likely TRUE?

An option is valid only if it is placed under seal.

Hiram Brody worked as a research assistant for Rheem Shareef,who was one of his professors.Rheem regularly asked Hiram to proofread documents that she had written.Hiram therefore was not especially excited when he was asked to proofread a research proposal that Rheem had drafted in connection with a major project for which she had recently received generous funding from the government .He did,however,become very excited when he read paragraph 14 of the document: "I will offer Hiram Brody the position of joint-investigator.That position will require him to both resign from his present post as my research assistant and take a leave of absence from his current studies.Given the nature of the project and given his outstanding qualifications,Hiram will be paid $8000 per month for a period of eighteen months." After Hiram hurriedly finished proofreading the document,he unsuccessfully tried to contact Rheem to talk about his new position.He learned,however,that she had left town,on very short notice,to be with a sick relative who lived outside of Canada.He then wrote a letter to the Chair of his University Department in which he both resigned as Rheem's research assistant and took a two-year leave of absence from school.He also left a message on Rheem's telephone answering machine in which he said,"I accept.I can't wait to begin working as your joint investigator." Hiram consequently was very angry when Rheem said,after she had returned from abroad,that she had changed her mind and had hired another person to serve as her joint investigator.Hiram insists that she cannot do so because he had already accepted her offer.A court,however,would say that Hiram could not create a contract by leaving a telephone message for Rheem because

Mohammed wants to buy his friend Khurram's old computer,but he currently has no money.He offers to pay Khurram $300 in a month at which time Khurram will give Mohammed his computer.Khurram nods and says,"sure." Two weeks later,Mohammed is paid and buys a new computer.He then refuses to buy Khurram's computer.Which of the following statements is true?

Rabby Inc is an oil exploration company that wants a sophisticated piece of equipment to be designed for its operations in northern Alberta.It therefore wants to receive bids from various engineering companies.In the context of a normal tendering process,which of the following statements is TRUE?

Regarding a battle of the forms,which one of the following does a court often consider when deciding objectively which contractual terms were agreed to by the parties?

Jose and Mei entered into what appeared to be a contract for the sale of an antique automobile.Jose agreed to pay the purchase price and Mei agreed to deliver the car to Jose's garage.Secretly,however,Mei planned to keep the car for herself.Will a court enforce the agreement?

In early March,Mathilde offered to rent her cottage to Tom for the first two weeks of July at a cost of $1200.Mathilde did not impose any restrictions on acceptance.Tom did not yet know when his vacation was scheduled,so he did not immediately respond to Mathilde's offer.Tom learned at the end of June that he was entitled to vacation during the first two weeks of July.He therefore arrived at the cottage on July 1st and told Mathilde for the first time that he was accepting her offer.Which of the following statements is most likely TRUE?

It is presumed that people who create agreements in commercial contexts do intend to create legal relations,while people who create agreement in social or family contexts do not intend to create legal relations.Provide an explanation for each of those presumptions.

"Contract law represents the pathology of commerce." Which of the following statements fully explains that quotation?

Which of the following statements best explains why the courts use an objective test to determine whether or not there is an intention to create legal relations?

How does the death of either the offeror or the offeree affect an offer? Provide examples to illustrate your answer.

Which of the following statements is TRUE?

The phrase consensus ad idem means

Gigagar Inc manufactures computer components.It wants to develop a new line of product,but realizes that it cannot do so without a complicated device known as a "digital phalange finger." It has tried to design that devise itself,but has failed.It therefore sent a letter to Katenben Ltd,another high-tech company,that said: "We are willing to pay $100 000 for the design of a digital phalange finger." Katenben Ltd responded by saying that it believed that it might be able to design the device.However,it also indicated that it could not guarantee its results and said that it did not want to commit itself to a potentially impossible project.Gigagar Inc then wrote back in a letter that said: "We understand your concerns.We do not require any guarantee of success.We also appreciate that,given the complexity of the project,you may decide to drop the matter after some preliminary investigations.Nevertheless,our offer stands-we will pay $100 000 if you successfully design a digital phalange finger." Katenben Ltd spent the next six months and a great deal of money trying to design the device.As it neared successful completion,however,Gigagar Inc announced that its own engineers had experienced an unexpected breakthrough and had successfully created a digital phalange finger.Gigagar Inc therefore told Katenben Ltd that its offer of $100 000 was revoked.Three days later,Katenben Ltd also successfully produced a working digital phalange finger.It now demands payment of $100 000.Is it entitled to that money? Give reasons for your answer.

Jerry has made an offer to contract with Cosmo.If Cosmo returns to Kelowna from Brandon before August 31,he can live in Jerry's spare room for four months without paying rent.Cosmo proposes for an option on the offer until August 1,which Jerry accepts.In July,Jerry realizes his other friend,George,is willing to move in and pay twice what Cosmo will pay.Therefore,Jerry wants to revoke the offer.Which of the following is true?

Agreements created between family members or friends are never legally enforceable.

A person may be held liable under a contract even if they did not personally want (subjectively intend)to enter into an enforceable agreement.

An advertisement in a newspaper is usually considered an offer if it contains a clear description of the product and a specific price.

Under the normal tendering process,a party that submits a bid may have obligations under both Contract A and Contract B.