Exam 8: Factors Affecting the Contractual Relationship

The court will not allow the careless party to escape responsibility when a shared mistake is the result of the negligence of one of the parties.

The equitable remedy of rectification is granted by the courts in which of the following situations?

In AMJ Campbell v. Kord Products Inc., a comma was inserted into the contract with the effect that both "freight" and "rebates" would be deducted from the sale price, rather than simply "freight rebates". This resulted in a difference of price amounting to $759,000. What was the result?

Explain what is meant by a "negotiable instrument".

The purpose of contract law is to give effect to the reasonable expectations of the parties to an agreement.

"A misrepresentation involves one person making a false statement of fact that misleads another and induces that person to enter into the contract." Discuss the accuracy of this statement.

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 plea, if any, would be used to defend against her action on the cheque?

Joe owned an apartment building and entered into a contract with Sam whereby Sam would operate that apartment building, but the proceeds from the rent and profits would be distributed among Joe's children. If Joe were to die and Sam were to refuse to pay out any profits to the children, what could they do?

Able Company contracted to sell to Baker Company 400 barrels of chemical C for $1,200. Able Company assigned the entire $1,200 in writing to Mr. Long, who sent a letter informing Baker Company of the assignment and directing Baker Company to forward money to him instead of Able Company. Unbeknown to both companies, at the time of the contract the ship carrying the chemical had sunk and all cargo was lost. Which of the following is true?

Explain what is meant by "vicarious performance".

Discuss what happens when the parties to a contract make mistakes with respect to what they have agreed.

Where the misrepresentation is innocent, explain the remedies available to the victim.

The principle that contract terms apply only to the actual parties to the contract is known as ________.

Jones offers to sell Smith his car. Smith thinks Jones is selling his 2011 Toyota, and Jones thinks he is selling his 2009 Pontiac. This is an example of which of the following?

Randal embezzled $6,000 of his employer's money and then disappeared. The employer's accountant called at Randal's residence and found out that his wife had a $3,500 term deposit. When the accountant threatened to have her husband arrested and imprisoned if she did not agree, she assigned the term deposit to the employer to help to defray the loss from the embezzlement. If the wife were later to sue for return of the term deposit, what would be her ground for avoiding the assignment?

Joe agreed to paint Sam's house for $1,000. Joe then assigned the $1,000 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.

When two parties are involved in a misunderstanding as to the meaning of a term of the contract, which of the following is usually applied by the court to settle the matter?

Len's new secretary came in and asked him to sign four letters that she said concerned general office matters. One of the "letters" was, in fact, a cheque for $500, payable to the secretary. The secretary cashed the cheque at her bank, and when her bank presented the cheque for payment, Len refused to pay it. He said he had been tricked and it was all a mistake. On these facts, which of the following is true?

Discuss the concept of an assignment, including an explanation of its significance in the modern business world.

"Joe received a cheque from Sam for work he had done painting Sam's house, and Joe passed that cheque onto Harry. Harry took it, not knowing that the work done was defective. Because of the principle that an assignee of contractual rights is in no better position than an assignor, Harry would not be able to demand payment on that cheque from Sam." Discuss the accuracy of this statement.