Exam 11: Failure to Create an Enforceable Contract

Sarah Burns is suing her lawyer,Tom Lachey,for the return of property worth $20,000 that she had given him.She had signed a properly sealed document making the gift to him.She says she knew what she was signing but felt overwhelmed by his manner.It will be up to Sarah Burns to prove on the balance of probabilities that she was unduly influenced by Tom Lachey.

Anderson Ltd.was negotiating a contract with the Bolton Manufacturing Co.for a large number of components for the office equipment Anderson Ltd.sells.The normal way of pricing the components is "by the piece," but Bolton Manufacturing sent a written offer to Anderson to sell the components at $5 a kilogram.The components would normally cost about $5.50 each and there are about two of them to the kilogram.After receiving Anderson Ltd.'s acceptance of the offer,Bolton realized the mistake it had made and is now refusing to perform the contract.Anderson has sued for breach of contract.

Which of the following is not a true statement about innocent misrepresentation?

Misrepresentation by nondisclosure renders a contract voidable at the option of the party misled.

Duane applied to the municipality of Smallville for a permit to build an addition onto his home.He contacted the municipal offices by telephone to enquire about the fee for the permit.The building official was unavailable,but the municipal clerk told Duane she thought the current fee was $100 per 1,000 square feet.Duane's new addition was planned to be 3,500 square feet,so he attached a cheque in the amount of $350 to his application and delivered it to the building office.When the permit was approved and returned a note was attached to it which read that all building permits now cost a flat fee of $250.No money accompanied the note.Duane contacted the municipal offices requesting a refund of his $100.He was told by the clerk that there was no municipal bylaw authorizing the repayment of excess fees paid to the municipality so she had no authority to process his refund.She suggested he could apply the extra amount to his municipal property taxes.Duane would probably be unable to obtain the money he paid in error.

Rob purchased an old glass vase,which Banya represented as an antique made by a famous Italian glassmaker in the 17^th century.As proof of its authenticity,Banya produced an old paper with a rough sketch of the vase on it,along with some writing,and what appeared to be the glassmaker's name.Rob later sold the vase to Castillo,after telling Castillo the story of the vase as told to him by Banya.After Castillo had purchased the vase,he discovered it to be a reproduction of the original,and of very little value.Banya is liable to Rob in tort for fraudulent misrepresentation of the vase if he knew the vase was only a reproduction,and the paper a forgery.

Undue influence involves a state of affairs whereby a person is so influenced by another that

.Red Stripe replied saying the $4 price is in Canadian currency,not Jamaican currency.What is the effect of the flaw on the agreement?

Bev and Renee moved to a large farm they recently purchased.The couple wish to subdivide some of the land and sell a lot.They contracted a local surveyor who completed the survey of the perspective lot to be severed.After the deal had been completed and the lot sold,the couple was confronted by the new lot owner,and a neighbour of the farmer.They produced an older deed showing the newly severed lot belonged to the neighbour's farm and did not belong to Bev and Renee.With the threat of legal action looming,the couple confronted the surveyor who told them they cannot sue him because he is an unlicensed professional,and is free from any responsibility for the services he renders.

Diana receives a phone call late one night from Robert,her former husband.He says that if she does not agree in writing to drop her action for support to put herself through university,he will distribute copies of compromising photographs he took of her when they were married.Diana signs the agreement under seal.This is a clear case of duress.

Innis Ltd.reach a verbal agreement with McKenzie Co.to sell them 16 tonnes of first-grade steel for $2,100 per tonne.At the request of McKenzie,Innis drew up a written version of the contract and both parties signed it.Shortly after delivery,Innis received a cheque from McKenzie for $19,200 in full settlement of the account,and was horrified to discover that the figures 1 and 2 had been reversed in the written contract and the price read "$1,200 per tonne" instead of "$2,100 per tonne," and neither party had noticed it at the time. Discuss what Innis Ltd.may do in this case.

Generally,a party is under a duty to disclose material facts to the other contracting party,and failure to do so is a violation of his or her duty of utmost good faith.

Oni bought a variety store franchise because he thought that its position on a bus route near some high-rise apartments would make it very lucrative.He had misread the transit map,however,for the bus ran along the street parallel to the one the store was on,and the occupants of the high-rises stopped off at a store on that street.Since Oni has made a mistake of fact,the court will grant him rescission of the franchise contract.

When the seller unknowingly makes an erroneous statement regarding the type of processor contained in a computer during negotiations leading to the sale of the computer,the contract

Indrek,a university student,owned a small automobile,which he desired to sell for $800.He placed an advertisement in the university newspaper offering the vehicle for sale,and included his telephone number for further information. A few days later,he received a telephone call from a man who identified himself as Mr.Green.Green asked Indrek a number of questions concerning the car,and then expressed a desire to examine the vehicle.A meeting was arranged for later that evening,and Indrek gave Green the opportunity to test drive the automobile. Green agreed to purchase the vehicle for $800 and offered Indrek a personalized cheque bearing the name "R.Green" as payment.Indrek was reluctant to accept the cheque without further identification,and suggested the two men meet the next day at the bank to close the deal.Green explained that he would not be available for the next week or two as he was leaving town on some business.Instead,he offered the driver's licence and a number of credit cards bearing the name "R.Green" as evidence of his identity.He offered to leave his credit cards with Indrek as security.With some hesitation and concern,Indrek signed the blank motor vehicle registration,and handed Green the papers necessary to transfer the ownership.In return he received the cheque and the credit cards which he agreed to hold until Green's return. The next day,Indrek presented the cheque at Green's bank only to discover the cheque had been forged.A customer at the bank whose name was "R.Green" had apparently lost his wallet sometime before,and the wallet contained the cheque book as well as the credit cards and licence. In the meantime,the purchaser of the automobile,posing as Indrek,sold the vehicle to Smith for $500,and disappeared. A few weeks later,Smith wrote a letter to Indrek asking if he might have the owner's manual to the automobile,and at that point,Indrek demanded the return of his vehicle.Smith refused to return the vehicle.He maintained that it was now registered in his name as a result of the transaction that,from his point of view,was a bona fide purchase from the person who possessed the registration documents for the automobile. Indrek brought an action against Smith for the return of the automobile.Discuss the points of law which are raised in this case,and indicate how the courts might decide the matter.

A met B while shopping,and in the course of conversation,mentioned that he had a motorcycle for sale.B was familiar with A's motorcycle,and offered to purchase it for $500.A accepted the offer,and A and B walked to A's home to get the motorcycle.When they reached A's house,they were told by A's father that the motorcycle had been stolen earlier in the day,and was subsequently found by the police in a badly damaged and burned condition in a local stone quarry.B may avoid the contract on the basis that the parties had made a mistake as to the existence of the subject matter.

Fraudulent misrepresentation renders a contract void ab initio.

Trent purchased a car from Veritas Motors.The sales agent stated that the car was new,although,in fact,it had been used as a demonstrator for three weeks.Two days after the purchase was completed,Trent learned that the car had previously been in an accident while a customer was trying it out.The sales agent had known all of this,but had not informed Trent of it.Two weeks later,a problem arose with the brakes,which necessitated repairs on three occasions.After the first repair,Trent wrote to Veritas claiming rescission of the contract and asked for a refund of his payments.Veritas refused.Two months later,Trent sued Veritas for rescission of the contract and damages equal to the amount he had spent on the car.

A met B while shopping,and in the course of conversation,mentioned that he had a motorcycle for sale.B was familiar with A's motorcycle,and offered to purchase it for $500.A accepted the offer,and A and B walked to A's home to get the motorcycle.When they reached A's house,they were told by A's father that the motorcycle had been stolen earlier in the day,and was subsequently found by the police in a badly damaged and burned condition in a local stone quarry.A and B made a valid contract,and A must deliver to B the motorcycle in the condition that it was in before it was stolen.

A tort that arises when a party suffers damage by acting upon a false representation made by a party,with the intention of deceiving the other is called