Exam 8: Factors Affecting the Contractual Relationship

A separate contractual obligation that can stand alone,independent of the written contract,is known as ________.

Although Zlotnic had been in business a long time,he had been forced to borrow heavily in the last few years.When his debt reached the limit of his line of credit,$100,000,the manager of the Regal Bank called him in for a talk.Subsequently,Zlotnic sold his house for $250,000 to the Johnsons.He contracted to buy another house from the Scotts.From the proceeds he anticipated receiving from the Johnsons,he assigned $200,000 to the Scotts,the purchase price of Scott's house,and assigned $50,000 to the Regal Bank to reduce his debt.The assignment to the Scotts was in writing; the assignment to the bank was not.The Scotts gave written notice of the assignment to the Johnsons on March 1,the day the money was owed to Zlotnic.Johnson verified the assignment and paid out the $200,000 to the Scotts.On March 2,the Regal Bank gave written notice of its assignment to the Johnsons.Unfortunately,at that time only $45,000 was owing to Zlotnic because the Johnsons had paid $5000 to the Canada Revenue Agency for Zlotnic.On these facts,which of the following is true?

A misrepresentation must be a false statement of fact unless it is a statement by an expert.

Explain what is meant by a collateral contract.

Distinguish between duress and undue influence.

Gomer paid the seller of a car with a worthless cheque.He then sold the car to an innocent person who paid him good consideration.Gomer took the money and left the country.The original seller found out who had the car and wanted it back.Who is entitled to the car if the court holds that the contract between the original seller and Gomer is voidable?

In which of the following instances would the court most likely hold the contract to be void on the basis of a mistake?

The law attempts to help persons who may feel forced to enter contracts.Which of the following is false with regard to the law of undue influence,duress,etc.?

What is the significance of an assignment qualifying as a statutory assignment?

With regard to the law governing privity of contract and assignment,which of the following is false?

"Misrepresentation involves a misleading statement of fact,not opinion." Discuss the accuracy of that statement.

Joe agreed to paint Sam's house for $4000.Joe then assigned the $4000 claim to Harry,who served notice on Sam about the assignment.When it came time for payment,Harry was informed by Sam that he would not pay because the paint was peeling off his house.Harry said that that was nothing to do with him and demanded payment.Explain the legal position of the parties.

Victims of misrepresentation who have affirmed the contract are bound by the affirmation and cannot later insist on

Duress takes place when one person takes advantage of another's vulnerability because of a special relationship with that person.

Where a heavy-duty equipment supplier sells a truck claiming it can haul ten tonnes of gravel but its actual capacity is only five tonnes,this is misrepresentation even where the seller believes what he said was true.

Len was behind in his work at the office.He decided to go in for a few hours on Sunday to catch up.He asked an assistant to come in for four hours.He turned on his office TV.Just then his assistant came in and asked him to sign four letters that she said concerned general office matters.He carelessly signed them without taking his eyes off the TV screen.One of the "letters" was,in fact,a cheque for $500 payable to the assistant.The assistant cashed the cheque at her bank,and when her bank presented the cheque for payment,Len instructed his bank not to honour it.He said that he had been tricked and that his signing it was all a big mistake.On these facts,which of the following is true?

Explain what is meant by a "negotiable instrument."

Mr.Frank,a foreman supervising some 43 employees,was asked by his secretary to sign a form requesting additional supplies needed on the factory floor.He was not careless when he examined the form,but his secretary had cleverly arranged the signature line so that instead of signing a request for supplies he signed a cheque payable to his secretary.What principle,if any,would be used to defend against her action on the cheque?

An assignee is "subject to the equities," means that a negotiable instrument can never convey more than existed between the original parties.

Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake,misrepresentation,undue influence,or duress.Which of the following is true with regard to these areas of the law?