Exam 9: Representations and Terms

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?

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

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.

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?

Suppose that a term is not the result of a statement expressed by either of two negotiating parties.Which of the following is TRUE?

Molly decides to sell her house by way of a private sale.After advertising and showing the house,she receives a written offer from an interested purchaser using a standard form document assembled from a do-it-yourself legal kit.Molly studied the offer and wished to change two of its terms.The interested purchaser agreed to the changes and reflected those changes in the document.Molly signed the document and cashed the down payment cheque.Two days later,Molly spotted an extremely onerous and somewhat unusual term that was not brought to her attention when reading the document.As a result,Molly wishes to cancel the contract.Which of the following is most likely TRUE?

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

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.Courts will do so on the basis that such a term

The BEST way for a company to manage the risk associated with standard form agreements is to

Which of the following is NOT true of the contra proferentum rule?

Negligent misrepresentation occurs when a person deliberately lies about a material fact inducing a contract.

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?

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

What is the rationale for holding people to their signatures even when they have not read or understood the contract?

A court will find an implied term

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.

Logan would like to purchase Susanne's car.He asks her two questions - if the car has new tires and if there is any structural damage to the car.Susanne answers the first question immediately and truthfully,but she is unsure of the second answer and tells Logan that she will have it inspected to find out and will get back to him on Thursday.Susanne forgets to get the car checked,so when Logan calls she lies and says the inspector told her the car was in perfect condition.Logan buys the car.If it turns out there is something wrong with the car,which of the following is 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 wouldn't 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 didn't 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 TRUE?

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?

Victor has been found guilty of misrepresentation in a contract.Victor failed to tell a handicapped person that the electric wheelchair he sold her had no brakes,though he did not know this fact.The judge says that he is a disgusting person and should be punished to the full extent of the law.This punishment would likely constitute