Exam 3: Formation of a Valid Contract

Parker owed Andrew a debt in the amount of $1,000.The debt was payable on June 1. -If Brendan paid $900 as settlement for the debt owed by Parker to Andrew,Brendan would be entitled to an assignment of the debt owed by Parker,and could collect the debt from him.

Alex is asked by Greta why minors cannot generally be sued for breach of contract."It's because they don't have much money,usually,and it would be unfair to let a big corporation take it away from them," he says.

Smith met Jones at a street corner and made a verbal offer to buy his canoe for $200.Jones replied that he would "think about it." Smith nodded affirmatively.The two then went about their separate business.Later in the day,Smith met Brown,who also had a canoe for sale,and Smith offered to purchase Brown's canoe for $175.Brown agreed to sell Smith his canoe.At 4 p.m.the same afternoon,after Smith and Brown had made their arrangement,Jones telephoned Smith to say he would accept Smith's offer to buy his canoe. -Smith's offer lapsed when Jones did not immediately accept the offer before the two parties departed on their separate business.

Gavin ordered a custom-made winter coat from a mail order catalogue.He is 17.Before the coat arrived,he contacted the seller and told the company he did not want it.He has no winter coat. -The coat is a necessary.

Jolene,aged 16,is hired by the Sparkle Company,a costume jewellery manufacturer,to learn the design and manufacture of costume jewellery for the upscale market.Under the contract she signs,she will receive a low salary for the first three years,and then will be put on the regular pay scale once her apprenticeship is completed.After a year,her designs are being sought by stores in Europe and the United States.The world's largest and most prestigious costume jewellery firm,located in Paris,wishes to hire her and pay her a fabulous salary as well as give her the free use of a large apartment in the most chic part of Paris.Sparkle's management refuses to release her from her contract because her designs are building their reputation."We taught her everything she knows," says the president of Sparkle.

Jack,who is 16,makes a contract with Thomas,who is 24,to cut Thomas's lawn all summer. -If Thomas breaches the contract,Jack cannot sue him.

Johnson became a member of the Book-a-Month Club under an agreement by which members agree to pay for any monthly selection that they have not notified the Club they do not want.Johnson forgets to tell them when he decides he does not want "How to Cook Small Rodents" and the book arrives at his house.

On July 23,Carson,who lived in Bytown,wrote a letter to Henri,offering to sell his (Carson's)vintage car for $18,000 .The letter was delivered to Henri in his home in Mount Royal,an hour's drive away,on July 27 . On July 24,Carson met his friend Jack on the street.Jack expressed an interest in buying Carson's vintage car.He offered Carson $18,000 for the car,but Carson said only that he would "give the offer some thought," and promised to advise Jack of his decision.Carson did not tell Jack of his offer to sell the car to Henri.On July 25,while on vacation in York,Jack sent a fax to Carson,offering to buy the car for $18,250 if Carson would deliver the car on July 30 to his farm 20 km west of Bytown.Carson received the fax the same day and,that evening,wrote and mailed a letter to Henri,revoking his offer to sell the vintage car. On July 28,Henri wrote a letter to Carson accepting his offer to sell the vintage car and enclosed a cheque for $18,000 as payment in full.On July 29,Henri received Carson's letter revoking the offer.Carson had business west of Bytown on July 29 and,since his trip would take him past Jack's farm,he decided to deliver the vintage car.Finding no one at home,Carson left the car on a trailer at Jack's farm,and left the keys to the car and a note in Jack's mailbox.The note stated that he had left the car behind the garage.On July 30,Carson received the letter of acceptance Henri had mailed to him on July 28.Carson immediately telephoned Henri to tell him he had sold the car to Jack,but Henri was out of town on a business trip.Carson left a message with Henri's wife and,on July 31,returned by mail the cheque that Henri had sent him with the letter of acceptance. Later on July 31,Carson received a telephone call from Jack,who had just returned from Toronto,requesting delivery of the car.When Carson explained that the car had been delivered on July 29,Jack stated that the car was not behind the garage.Carson then requested Jack to call the police to investigate the theft.Later in August,the police located the car in the possession of a minor and an arrest was made.Unfortunately the car had been badly damaged while in the thief's possession.The estimate of damages was $12,000. Discuss the issues raised in this case.Describe the rights of the parties (if any)and the possible outcome of any litigation if legal action should be taken to enforce the rights of the parties.

Winston was an engineer of great repute in the field of fluid mechanics.Some years ago he took out a patent on a general theory of how fluid moves through a particular shape of valve,and a patent on a unique valve specifically adapted for use in a nuclear reactor.He had formed a company that had produced this latter valve in the Canadian market and other countries that used Canada's CANDU Reactor.After a number of years of successful business operations,Winston was approached by a group of investors interested in purchasing his company,and a deal was concluded.As part of the contract of purchase and sale,Winston sold the patent to the valve and agreed that he would not work in or carry on any other business manufacturing valves,nor would he engage in any other business that might compete in any way with the purchasers' business for a period of 10 years.The restrictions applied on a worldwide basis.Winston retired to Florida and after five restless years again became involved in the field of fluid mechanics,making designs for certain parts for nuclear reactors for submarines of the U.S.Navy.One particular part that he designed and built was based on the patented principles of his general theory,which he had never sold,and while it was similar to his former valve in many ways,a slight change had rendered it patentable in its own right.On learning of the multimillion-dollar sales that Winston had effected to the U.S.Navy,the purchasers of his former business brought suit for his breach of the contract.With his new valve Winston had generated profits of $5 million before the "10-year waiting period" had expired and $10 million after the period had expired.Discuss the relevant issues of contract bearing on this case;the relevant aspects of business that would assist the court in determining damages,if any;and render your own decision.

Doug,the 17-year-old brother of a friend of yours,bought your old car from you three months ago to get him to and from his new job.He needed a car because there was no public transportation in that area.You agreed to let him pay in 36 monthly instalments of $200,but he has paid you only once so far.Yesterday,you asked him to pay up and he told you he had spent all he had earned.When you told him you would have to take him to court,he said that an adult cannot sue a minor on a contract.Today,a tow truck left the remains of the car in your driveway;it had been so badly damaged in an accident that was Doug's fault that it was a write-off.A note on the windshield said "Your car doesn't run too well,but I won't sue.Let's call it quits.Best wishes,Doug." Under your contract he was to have insured the car,but he did not. A)Discuss whether you have any recourse against Doug. B)If Doug had bought the car,simply for normal driving,would your answer be any different.Why or why not?

Mabel,a young woman aged 17,went shopping.She purchased a new coat on credit at a clothing store.Later the same day,she took her expensive watch to a jewellery shop to have a new watch band installed.While in the shop,she purchased on credit an additional watch for herself,and a silver bracelet as a gift for a friend.When the merchants later requested payment,Mabel refused to pay. -Mabel would be liable for the payment for the coat,if the coat was a "necessary."

Corbin sold his retail clothing business to Austin.The business was located in a small town,and most of the customers lived within a radius of five miles of the clothing shop.As a part of the sale agreement,Corbin agreed not to set up a similar business in competition with Austin for a period of five years or within a radius of five miles of the shop. -A court will strike down an unreasonable restriction,thereby leaving the purchaser unprotected from competition from the seller.

Anderson,a city employee,collected garbage along Smith's street on Thursday of each week.One day Rick said to Anderson: "You have done such a good job,I will give you $10 when you come by next week." The next week,when Anderson made his regular garbage pickup for the city,he met Rick and asked for the $10.Rick refused to pay. -Anderson could not enforce Rick's promise to pay,because he cannot show consideration for the promise made to him.

Jeremy agrees not to sue Angela for having crashed into his car if she agrees to pay for his repairs.Since he promised only not to do something that he could have done,he has not given consideration for her promise to pay.

Mario responded to an advertisement placed by Serge in a local newspaper.Serge was looking for business investments,and Mario sent him a letter on October 1 that said he was willing to make Serge a partner in his tie-dyed T-shirt business if Serge was willing to put up $5,000.Serge received that letter on October 6 and wrote back the same day saying he would love to get involved in the business and would send Mario a certified cheque for $5,000 as soon as the bank had transferred the money from his savings account and certified the cheque.This letter was received by Mario on October 9,and the certified cheque was sent on October 8 and received on October 12.Meanwhile,Mario mentioned the advertisement to Sonia,and she said she would like to get into the business and would be willing to put up $8,000.Mario sent another letter to Serge,on October 4,which Serge received on October 7,saying Mario had changed his mind and would not be willing to have Serge as a partner. -What is the legal term for i)Mario's letter of October 1? ii)Mario's letter of October 4? iii)Serge's advertisement? iv)Serge's letter of October 6?

In a letter to his nephew,Peter,Mortimer promised to leave Peter all his money when he died,in memory of Peter's father for whom Mortimer had great respect.There is nothing Peter could do to ensure that Mortimer will keep his promise since it is gratuitous and a gratuitous promise can never be made enforceable.

Zev and John were neighbours.Before Zev left on a holiday,he asked John to "keep an eye on his house." While Zev was on holidays,John noticed that Zev's lawn was in need of cutting,and proceeded to cut the lawn.On Zev's return from his holiday,John demanded $10 for cutting the lawn. -Zev's statement was a request for service,and hence John may claim for his service of cutting of the lawn on the basis of quantum meruit.

There are requirements predetermined by law to make a contract binding and,therefore,legally enforceable.With your knowledge of the process of arriving at a contract,explain how that process relates to the legal solidification of a contract.

Mr.Martin,who has been declared bankrupt,decided to rent an apartment for $1,600 per month,since his house is to be sold to satisfy his creditors. -Assuming this is a contract for necessaries,Mr.Martin must tell the landlord that he is a bankrupt or he cannot make the contract.

Mr.Megabucks promises the Turtle Preservation Society of Victoria that he will give it $500,000,provided it names after him the new headquarters building it wants to erect.The president of the Society tells him that his generous donation will allow them to carry on their turtle preservation work while providing decent working conditions for their staff at the same time.At a ground-breaking ceremony soon after,the announcement is made that the building will be named after Mr.Megabucks.Four months later,Mr.Megabucks suffers severe business reversals and decides to withdraw his promise.