Deck 8: Non-Enforcement of Contracts

Question 1

A sales representative knowingly entered into a contract for an alarm system during a door-to-door sales campaign with an obviously mentally ill individual.Why could the contract be immediately rendered voidable at that individual customer's request?

A) The contract is contrary to the culpable silence provisions contained in the Vulnerable Persons Act.
B) The contract is unenforceable in accordance with the Unconscionable Transactions Relief Act.
C) Establishing true consent is not possible due to the individual's incapacity to grasp the essence and effect of the contract.
D) The individual is lacking legal capacity and is unable to perform the contract in whole or in part.

Answer 1

C

Question 2

Which of the following would be enforceable against a minor?

A) a contract for a necessary of life
B) any employment contract
C) a contract where the minor received legal advice prior to entering into the contract
D) a contract to purchase a concert ticket

Answer 2

A

Question 3

Which statement best reflects one of the principles regarding the doctrine of unconscionability?

A) It is based on the assumption that the parties to a contract should have equal bargaining power.
B) Imbalance in bargaining power alone is insufficient on its own to upset a contract.
C) The court will only intervene if there is evidence of mental incapacity of one of the parties.
D) The doctrine of unconscionability imposes a positive duty to disclose information.

Answer 3

B

Question 4

How does misrepresentation differ from a breach of contract?

A) Misrepresentation refers to statements made prior to entering into a contract.
B) Misrepresentation must be intentional in order to be actionable.
C) Misrepresentation only applies if the parties are in a relationship of utmost good faith.
D) Proof of misrepresentation alone is insufficient for the courts to rescind a contract.

Question 5

Which of the following might prove that a contract was freely entered into by the parties?

A) evidence the contract was signed in the presence of a witness
B) evidence the weaker party received independent legal advice
C) evidence there has only been presumed pressure but not actual pressure
D) evidence that the terms of the contracts are fair

Question 6

Holding a gun to someone's head to induce them to enter a contract exemplifies which of the following legally exceptional circumstances?

A) unconscionability resulting from presumed pressure
B) undue influence resulting from actual pressure
C) misrepresentation resulting from presumed pressure
D) undue inducement resulting from actual pressure

Question 7

Which of the following are achieved through the law's enforcement of contracts?

A) the protection of economic interests and avoidance of coercion
B) due diligence and fair contractual terms
C) fairness and equality of the parties within contractual relationships
D) the integrity,reliability,and predictability of contractual relationships

Question 8

Which of the following situations might give rise to a void contract?

A) a contract that is contrary to public policy
B) a contract that fails to meet the requirements of the Statute of Frauds
C) a contract between spouses
D) a contract between partners in a partnership

Question 9

While negotiating a commercial agreement,Juan made a misrepresentation that goes to the heart of the ensuing formal contract between the parties.How do you think the other party to the contract will act,once it becomes aware of the misrepresentation?

A) The other party must seek a mediated remedy for the problem.
B) The other party may opt to enforce the contract or have it set aside.
C) The other party must seek legal advice to remedy the misrepresentation.
D) The other party may opt to reproach the contract and set it aside.

Question 10

Cory,aged 17,plays hockey under contract with the Northern Manitoba Huskies junior hockey team.What is the legal term given to this particular type of contractual arrangement?

A) beneficial contract of training
B) beneficial development contract
C) beneficial contract of service
D) beneficial minor training contract

Question 11

Michael was severely injured in an automobile accident.While in the hospital,he was visited by an insurance adjuster who made him a take it or leave it offer of $3000 in full settlement of his personal injury claim.Michael accepted the offer because the adjuster told him there would be no further offers.If Michael's claim is actually worth $100,000,on what legal basis might the court cancel the agreement?

A) because the agreement was illegal
B) because the agreement was entered into under duress
C) because Michael lacked capacity to contract
D) because the agreement is unconscionable

Question 12

How does Canadian contract law protect minors and mentally incapacitated individuals?

A) by ensuring that they cannot enter into legally binding contracts
B) by requiring the courts to approve their contracts
C) by providing that only certain types of contracts are enforceable against minors and those who lack mental capacity
D) both ensuring both groups are represented by guardians when entering into contracts

Question 13

In what way is a void contract different from a voidable contract?

A) A void contract contains a defect so substantial that it is of no force or effect.
B) A void contract cannot be enforced because it is contrary to legislation or public policy.
C) A voidable contract fails to meet the requirements imposed by the Statute of Frauds.
D) A voidable contract fails to meet the requirements imposed by the Sale of Goods Act.

Question 14

Marie,an elderly widow,has discovered that the fee in the contract she signed to install new siding on her home is more than twice that typically charged for such work.What must Marie prove in order to cancel the contract on the basis of unconscionability?

A) Marie must prove undue influence was present.
B) Marie must prove the presence of actual pressure.
C) Marie must prove the parties are in a relationship of utmost good faith.
D) Marie must prove inequality and an improvident bargain or exploitation

Question 15

Which of the following are competing goals that contract law attempts to balance when enforcing contracts?

A) the goal of providing remedies,and the goal that contractual terms are reasonable
B) the goal of preventing people from avoiding contractual obligations,and the goal of ensuring the contract reflects the real agreement between the parties
C) the endeavour to preserve the real agreement reached by the parties,and the goal of preventing mistakes
D) the goal of ensuring equal power between the parties,and the goal of ensuring contract negotiations are successful

Question 16

What is the policy rationale underlying the rule that minors are obligated by contracts for essentials?

A) minors who are self-supporting should be treated like adults
B) no one would provide essentials to minors if such contracts were unenforceable
C) essentials of life are usually priced fairly
D) minors do not voluntarily incur obligations for essentials

Question 17

Kramer returned from a wedding in an intoxicated state and,while still under the influence,agreed to sell his motorcycle to his roommate for a price substantially lower than its market value.Which statement best describes Kramer's legal position?

A) He must claim relief due to the effects of duress.
B) He must claim relief on the basis of undue influence.
C) The contract may be voidable if his roommate was aware he lacked mental capacity.
D) The contract will be binding on Kramer because his reduced mental capacity was self-induced.

Question 18

Where circumstances surrounding a proposed commercial transaction involve an unsophisticated party,what would a court most likely accept as undisputable evidence that that party has proceeded with the transaction on a free and informed basis?

A) a certificate of individual legal advice
B) a certificate of independent legal advice
C) a certificate of indisputable legal advice
D) a certificate of indubitable legal advice

Question 19

What is the definition of "duress" with respect to contractual relationships?

A) inequality between the parties
B) the threat of physical or economic harm that results in a contract
C) unfair manipulation that compromises someone's free will
D) unfair criminal activity that seriously undermines a contract

Question 20

In the case of Bank of Montreal v.Duguid (2000),47 O.R.(3d)737 (C.A.),the court was asked to consider whether a wife who had signed a guarantee on a loan for her husband's business was entitled to be released from the guarantee on the basis of undue influence exerted by her husband.Why did the majority of the court find that the guarantee was enforceable against the wife?

A) because the wife had received independent legal advice
B) because the wife was a real estate agent and presumably knowledgeable enough to not be unduly influenced by her husband to sign the guarantee
C) because agreements between spouses are always enforceable
D) because there was no evidence that the guarantee was unconscionable

Question 21

Rita is employed as a financial investment advisor for a local investment services firm and signed a restrictive covenant that prevents her from working as an investment advisor for a period of 5 years anywhere in Canada should she leave her current employer.On what legal basis might this clause be unenforceable?

A) It violates the Charter guarantee of freedom of mobility.
B) It constitutes an unreasonable restraint on trade.
C) Rita failed to read the contract before signing it.
D) It violates the Criminal Code.

Question 22

How does the common law classify a situation in which both parties to an agreement have shared the same fundamental mistake in order to provide a remedy?

A) as a mistake at law
B) as a shared mistake
C) as a common mistake
D) as a mutual mistake

Question 23

Johan is negotiating the possible sale of one of his company's regional business operations to Bill.In response to Bill's inquiry regarding the duration remaining on the existing supply contracts,Johan provided the end dates of the contracts themselves.Johan did not advise Bill that two of the customers were on the brink of insolvency.If Bill relies on the information Johan provided,what recourse will contract law allow him?

A) The contractual defect is so substantial that it is of no force or effect.
B) A misrepresentation must meet the requirements imposed by legislation.
C) An aggrieved party can choose to enforce the deal or bring it to an end.
D) Partial provision of information allows the contract to be rescinded.

Question 24

What is the legal definition of a "guarantee"?

A) a fair contract formed by one advantaged party over another
B) a pledge evidencing the capacity to enter into legally binding contracts
C) a pledge to pay another's liability in the event of default of such duty
D) a contract made enforceable by performance over a period of time

Question 25

Which of the following is NOT necessary for an actionable claim of misrepresentation?

A) a false statement of fact
B) the statement induced the other party to enter into a contract
C) the speaker knew the statement was untrue
D) the untrue fact was material to the contract

Question 26

David was approved for automobile insurance coverage despite his history of seizures.As it turns out,the insurance agent forgot to ask him about his medical history and David did not bother mentioning his seizures.What is the legal position of the insurer?

A) The insurer is still bound to provide coverage because it did not ask David about his medical history.
B) The insurer may deny coverage because applicants for insurance have a positive duty to disclose matters that would be relevant to the risk of accepting the application.
C) The transactions is unconscionable and may be cancelled at the discretion of the insurer.
D) The insurer may not cancel the contract but may increase David's premiums to reflect the additional risk he represents.

Question 27

What is the legal definition of "mistake"?

A) the threat of physical or economic harm that results in a contract
B) an unfair manipulation that compromises someone's free will
C) an error made by one or both parties that seriously undermines a contract
D) a false statement of fact that causes someone to enter a contract

Question 28

A judge has determined that offending portions of a contract can be severed,and the remaining portions saved.What type of common law contractual infraction is this judge resolving?

A) a mistaken contract
B) a fraudulent contract
C) an illegal contract
D) a negligent contract

Question 29

Why are contracts that unduly interfere with the ability to earn a livelihood or reduce competition generally unenforceable in common law?

A) They contravene the rules of goodwill contained in the Competition Act.
B) They cannot be enforced because they are contrary to statues and public policy.
C) They contravene the rules of fairness contained in the Consumer Protection Act.
D) They are contrary to the community's common sense and common conscience.

Question 30

Which of the following elements would a court consider when determining the enforceability of a non-competition clause on the grounds of reasonableness?

A) contravention of the Real Estate and Business Brokers Act
B) the reasonableness of location and time restrictions
C) contravention of anti-price maintenance legislation
D) the need to maintain free and open competition

Question 31

Which of the following is an example of a contract that would be considered contrary to public policy?

A) a loan that charges interest in excess of 60% per annum
B) a contract in restraint of trade
C) a commission contract of an unlicensed realtor
D) a contract to that contains an improvident bargain

Question 32

Which of the following forms the basis of a common argument for setting aside a contract based on mistake that will rarely succeed in Canadian courts?

A) misunderstanding of the legal consequences of giving an oral guarantee
B) misunderstanding of the terms of an oral contract dealing with land
C) misunderstanding of the nature or type of contract signed by the party
D) misunderstanding that a contract is not to be performed within one year

Question 33

Under what circumstances might a court enforce a verbal contract for the sale of land?

A) where the plaintiff comes to the court with "clean hands"
B) where enforcement of the agreement will not interfere with the rights of third parties
C) where the person attempting to enforce the agreement has performed acts that can be explained by the existence of an agreement
D) where it would be unfair to permit the defendant to avoid his or her contractual obligations

Question 34

What criteria must be satisfied in order for a misrepresentation to be actionable?

A) the misrepresentation must be made to a minor
B) the misrepresentation must be material to the contract
C) the misrepresentation must be made in conjunction with a threat of harm
D) the misrepresentation must be intentional

Question 35

Which type of misrepresentation entitles the wronged party to cancel the contract?

A) innocent misrepresentation
B) unconscionable misrepresentation
C) fraudulent misrepresentation
D) material misrepresentation

Question 36

What is the goal of the common law remedy of rescission?

A) It seeks to provide redress to the innocent party.
B) It seeks to provide monetary redress for harm incurred.
C) It seeks to return parties to their pre-contractual positions.
D) It seeks to enforce good faith in commercial transactions.

Question 37

Which of the following reflects the general view in Canada with respect to electronic signatures?

A) They cannot take the place of signatures on written contracts.
B) They are capable of binding the parties to contractual obligations.
C) They are not acceptable in the absence of extrinsic evidence of an agreement.
D) They are always accepted as conclusive evidence of the parties' intention.

Question 38

Why do the courts subject restrictive covenants in the employment context to greater scrutiny than those arising in the sale of a business?

A) because the clauses are typically ambiguous
B) because there is typically a power balance in employment situations
C) because such agreements offend human rights legislation
D) because such clauses violate the Competition Act

Question 39

A seller unknowingly made a misrepresentation during negotiations to sell his car.Now that the seller is aware of the misrepresentation and the prospective buyer is returning to make an offer,what recourse is available to rectify the situation and accept the offer without risking an ensuing lawsuit?

A) The seller has no recourse; once information is offered,it must be completely accurate.
B) The seller can remain silent to secure the best price and plead mistake as a defence.
C) The seller should simply forego the deal with this buyer and look for a new buyer.
D) The seller must attend to the prompt disclosure of the correct facts to the prospective buyer.

Question 40

What was the intended purpose of the creation and enactment of the Statute of Frauds?

A) to require that commercial contractual relationships be stated in one document
B) to avoid the difficulty in proving the value of the goods or services exchanged
C) to allow performance to take the place of a written duly executed agreement
D) to impede perjury and fraud by documented evidence of specified types of contracts

Question 41

In order for a contract to satisfy the requirement of being written,all of the requirements must be met in one document called "the contract."

Question 42

Sanjip has elected to build up the earth around the cracked foundation of his home prior to listing the home for sale.Sanjip's action will not amount to misrepresentation if he fails to disclose the cracks to potential purchasers.

Question 43

When applying for life and disability insurance protection on her mortgage,Marabou neglected to disclose that she had been diagnosed with type 2 diabetes.As players in the commercial contractual area have a duty to look after their own interests,the insurance policy will be enforced should she become disabled or die as a result of the undisclosed pre-existing condition.

Question 44

Minors have the option of fulfilling their contractual obligations and suing the other party to enforce the contract.

Question 45

To establish undue influence,evidence of actual pressure requires the party seeking relief to show,among other things,that the influence existed.

Question 46

Some Canadian common law courts have ruled that,where proper circumstances allow,a party's lack of a practical or realistic alternative can establish valid evidence of economic duress.

Question 47

Only misrepresentations that were significant to the decision to enter into the contract are actionable.

Question 48

A contract will be set aside for mistake only if one party realized the other party was mistaken at the time of entering the contract.

Question 49

The remedy of rescission is only available in the case of fraudulent or negligent misrepresentation.

Question 50

Which of the following would be a valid provision under the various provincial acts dealing with the sale of goods?

A) Contracts above $20 to $25 must be made in writing in order to be enforceable.
B) If partial payment or acceptance is made by the buyer,an oral contract is enforceable.
C) Contracts above $15 to $20 must be made in writing in order to be enforceable.
D) If creation of a record of an agreement is evident,the court must make a prudent ruling.

Question 51

Carelessly signing a document without reading it will be sufficient to avoid enforceability.

Question 52

A contract with an individual who lacks mental capacity is always unenforceable.

Question 53

People seeking to avoid a contract owing to mental capacity,duress,undue influence,or unconscionability must do so promptly.

Question 54

In order to count as misrepresentation,it must be proven that the party making the statement knew it was untrue.

Question 55

The value in obtaining a certificate of independent legal advice is that it can help prove a contract was freely entered into.

Question 56

A void contract is considered to have never existed at all.

Question 57

Ranjit,Quan Lu,and Ng are all directors of BigSkyInvestments Inc.who have a beneficial interest in a contract that BigSkyInvestments' management is considering and each must disclose their status to management in accordance with statute requirements.

Question 58

Proof of unconscionability requires proof of inequality between the parties.

Question 59

A simple oversight or error by one negotiating party does not constitute a legal mistake and provides no basis for voiding a contract.

Question 60

When a relationship exists between a lawyer and a client,the court is entitled to assume presumed pressure amounting to undue influence.

Question 61

The only basis for a contract being held to be illegal is if it is prohibited by the Criminal Code.

Question 62

A contract is only as good as the process leading up to its formation.What factors should businesses train their employees to consider when negotiating contracts in order to ensure they are enforceable?