Deck 6: Important Terms and Contract Interpretation

Question 1

The test for when a court can add an implied term into a contract is the

A)subjective assessment test
B)objective assessment test
C)reasonable person test
D)beyond reasonable doubt test
E)officious bystander test

Answer 1

E

Question 2

Which of the following could be used as a way to get around the parol evidence rule? The court could find that

A)the contract was partly written and partly oral
B)there was a collateral contract
C)the contract was made under duress
D)both A and B
E)there is no way to get around the parol evidence rule

Answer 2

D

Question 3

Which of the following statements is FALSE? Standard form contracts

A)are necessary for the business world to function
B)are usually only used if the contract is between two companies
C)often include a disclaimer clause
D)are usually written to favour the party that wrote the contract
E)often result in one party signing it without reading all the terms

Answer 3

B

Question 4

What was the basis of the court's decision in Nickel Developments Ltd. v. Canada Safeway Ltd.?

A)Nickel was in breach of contract because it was an express term that it would not lease to another supermarket in the shopping centre.
B)Safeway was in breach of contract because it was an implied term, in order to meet the officious bystander test, that Safeway would continue to operate its supermarket in the shopping centre.
C)Safeway was not in breach of contract because there was no express term in the lease requiring it to continue operating its store in the shopping centre, nor could such a term be implied.
D)Safeway was in breach of contract because it was the custom in shopping centre leases that the anchor tenant will not abandon its business.
E)Both B and D

Question 5

Which of the following is NOT a rule for the interpretation of contracts?

A)The court will apply an objective test to the determination of the intention of the parties.
B)The court may not consider dealings between the parties prior to entering into the contract.
C)The court will read the words in a contract in the way that they are understood by people in business concerned.
D)The court may use the dictionary definition of a word which appears in a contract.
E)The court may rely on what the contract itself says that a word in it means.

Question 6

In interpreting a contract, the court does NOT consider which of the following factors?

A)the ordinary meaning of the words used
B)other provisions in the contract
C)the true intention of the parties
D)the length of the contract
E)the normal terms used in that industry

Question 7

Carol worked for All Safe Inc. an insurance company in Ottawa. When she signed her employment contract it stated if she left All Safe she could not work for another insurance company within the Metropolitan City of Ottawa for 12 months. Carol left All Safe and within a week worked for Central Insurance Co. in Gatineau. All Safe said that Gatineau was within the Metropolitans City of Ottawa so Carol could not work there. Carol said Gatineau was not part of the Metropolitan City of Ottawa. It turns out there is no clear definition of what is meant by the term "Metropolitan City of Ottawa." As a result a court would most likely

A)rule in favour of All Safe because it had drafted Carol's employment contract
B)rule in favour of All Safe because it had a right to protect its business
C)rule in favour of Carol because she needed to earn a living
D)rule in favour of Carol because the clause was confusing and she is not the one who drafted it
E)both A and B

Question 8

Which of the following statements is TRUE? In a standard form contract

A)a court will interpret the contract in favour of the party that wrote it if there is confusion
B)a company does not have to point out any unusual terms if the contract is made between two companies
C)consumers must beware and carefully read all the terms as the court will not protect them if they did not notice a disclaimer clause
D)lawyers for both sides usually negotiate all the terms
E)signatures cannot be done electronically, only in person

Question 9

A clause in an agreement states: "There are no representations or warranties except as expressed herein in writing." What is the name for the type of clause?

A)Disclaimer
B)Exemption clause
C)Venue clause
D)Entire agreement clause
E)Choice of law clause

Question 10

Which of the following may be a reason the court will add an implied term to a contract?

A)The parol evidence rule
B)The original term was unclear and this would add clarity to the contract
C)It was a term usually used in the industry so it needed to be added
D)The term was so obvious the two sides would have easily agreed to it when the contact was made
E)Once a contract is formed no new terms can be added

Question 11

Contra Proferentem means:

A)where there is an ambiguity in a contract term, that term is interpreted against the one who did not draft the contract
B)the contract is against public policy
C)where there is an ambiguity in a contract term, that term is interpreted against the one who drafted the contract
D)the courts prefer a contract to be in writing, not done orally
E)the contract is for an illegal purpose

Question 12

Which of the following would a company put in a standard form contract to try and prevent the court from making an exception to the parol evidence rule?

A)an entire agreement clause
B)a disclaimer clause
C)a limitation clause
D)an exemption clause
E)all of the above could achieve that result

Question 13

Kim has a written contract with Eddie's Snowplows for snow removal of snow from around his store. The contract is in effect "until the end of the winter". There are two unexpected snowfalls towards the end of April, and Eddie charges Kim extra for clearing the snow on those two occasions. Kim's position is that "winter" continues until the last snowfall of the year. Besides, although they didn't write it in the contract, Eddie told Kim not to worry if the winter lasted longer than usual, he'd take care of it. Eddie told that to his other customers in the area too. What do you think is the likely result if this dispute goes to court? Why?

A)Kim will not have to pay. The contra proferentem rule applies against Eddie's interpretation of the contract.
B)Eddie was entitled to charge extra. The dictionary says that winter ends at the beginning of spring, which is in March.
C)Kim will not have to pay. The contract is ambiguous with respect to this term, so what Eddie said to Kim and the other customers is admissible to interpret it.
D)Eddie was entitled to charge extra. The court cannot look outside the four corners of the contract to see if "winter" means something other than "winter".
E)Eddie was entitled to charge extra. The custom of the trade is that snowplowers quit by mid-April at the latest.

Question 14

The two cases of Bank of Montreal v. Bal and Corey Developments, deal with the application of the parol evidence rule. Which of the following best explains the different results in these cases?

A)In Corey Developments, a party was trying to get out of a guarantee. In Bal, a party was trying to avoid a warranty.
B)Corey involved a greater inequality of bargaining power than the other two cases.
C)The contract in Corey Developments contained an entire agreement clause, but Bal did not.
D)In Corey Developments, there was very clear external evidence of representations contradicting the terms of the contract, but in Bal the plaintiff's evidence was very weak
E)Corey is an older case and the parol evidence rule is now applied more strictly

Question 15

The parol evidence rule means:

A)If a contract is in writing the court will not hear other evidence to interpret the terms of the contract
B)If a contract is in writing the courts will accept other evidence to interpret the terms of the contract
C)Most contracts have to be in writing to be valid
D)if someone behaves in jail they can be released early
E)Any evidence of earlier discussions that can help a court interpret a contract must be considered even if the terms are clear

Question 16

The parol evidence rule:

A)Absolutely bars all oral evidence relating to additional terms of a contract.
B)Creates a presumption that the written document contains the entire contract.
C)Makes oral statements govern over written ones.
D)Can be used to imply (add)terms to a contract.
E)Is a provision in the Statute of Frauds

Question 17

On March 26, 2008, William and his friends Jill and Richard went to Sun High Ski Resort in Calgary for a day of snowboarding. Only Jill and Richard had any previous experience with snowboarding. The three friends rented snowboards and helmets. They were given a standard form document to sign which stated in very tiny print that the ski resort was not responsible for any personal injuries suffered by them howsoever caused. The three friends signed the document without reading it and no one at the ski resort brought the term to their attention. On his first run down the hill, William collided with an employee of the ski resort who was standing directly in his path. He fell heavily and suffered severe personal injuries. William has brought an action against the ski resort for damages. Which of the following statements is TRUE?

A)there is an exclusion clause in the document
B)William may recover damages for his injuries
C)the court may find that the exclusion clause does not apply
D)all of the above
E)William cannot get money from the resort because he signed the document

Question 18

Which of the following best explains the parol evidence rule?

A)A court will accept evidence of any oral statement that changes or contradicts the terms of a written contract.
B)A court will not accept evidence of any oral statement that changes or contradicts the terms of a written contract.
C)A court will examine an oral statement made concerning the contract and decide which part to believe.
D)A court will examine a statement made in negotiating the contract in determining misrepresentation.
E)A court will only accept an oral statement as evidence if there are circumstantial guarantees of its trustworthiness.

Question 19

In the phrase "parol evidence rule," the term "parol" means:

A)Oral
B)Early release from prison
C)Admissible at trial
D)Written
E)Prior Statement

Question 20

The parol evidence rule operates as:

A)a presumption
B)a false assertion
C)an encouragement for more evidence to aid in contract interpretation
D)a pardon
E)an obstacle for the use of standard form contracts

Question 21

Joe Kunz agrees to buy a computer from Alf Singer for $3,000, by paying six installments of $500 each. Joe gave Alf $500 as a down payment but then backs out of the deal. Alf's loss of profit will be $1,500. Which of the following statements is TRUE?

A)Joe is entitled to get the $500 back.
B)Alf is entitled to keep the $500and sue for the balance of the lost profit.
C)Alf is entitled to keep the $500, but cannot sue for the balance.
D)Under no circumstances can Joe ever get the down payment back.
E)Alf is entitled to keep the $500 and sue for all of his lost profit.

Question 22

First Construction Company agrees to build a complete assembly line for Plastic Moulds Inc. by April of that year. A term of the contract states: "If First Construction fails to complete the assembly line by April 1, it will pay Plastic Moulds the sum of $5,000 per day until completion. This sum is agreed by First Construction to be liquidated damages and not a penalty." Plastic Moulds knows that its real damage will likely be $500 per day, but it wants to give First Construction a little incentive to make the deadline. However, First Construction is late. Which of the following is true?

A)The clause is enforceable because the parties have agreed that it is a liquidated damages clause.
B)The clause is enforceable because Plastic Moulds is entitled to use it to provide incentive to First Construction.
C)The clause is not enforceable because it is not a genuine pre-estimate of damages.
D)The clause is enforceable because it is a genuine pre-estimate of damages.
E)Both A and D

Question 23

Joan Lane took her white satin wedding dress, trimmed with beads and sequins, to a dry cleaner. When Joan questioned why she had to sign a receipt, the clerk told her that this form exempted the cleaner from liability for damage to the beads and sequins. In fact, the clause read: "The company is not responsible for any damage, however caused." When Joan picked up the dress, the beads and sequins were fine, but there was a large stain on the satin. Joan sues. Can the cleaner rely on this exemption clause?

A)Yes. Even interpreting it strictly against the cleaner, "any damage" includes damage to the satin.
B)No. The clerk made a misrepresentation as to the effect of the clause.
C)No. There has been a fundamental breach of this contract by the cleaner.
D)Yes. The clerk specifically brought the clause to Joan's attention before she signed.
E)Both B and C

Question 24

Joanne Spitz gives a landlord $100 to hold an apartment for a day while the landlord has a written lease prepared overnight containing a rental clause for $800 per month. The next day on the way to sign the lease, she sees another apartment much cheaper that she wants, and wants to cancel the first deal. Which of the following statements is true bout the $100 payment?

A)It is a down payment and the landlord can only claim any actual loss.
B)It is a down payment and is lost on cancellation by Joanne
C)It is a deposit and is lost on cancellation by Joanne
D)It is a deposit and must be given back to Joanne on cancellation.
E)It is a deposit but the landlord can only keep it if he has actual loss because of the cancellation.

Question 25

Cool Clothiers agrees to buy 10,000 Blue Jays jerseys from You Da Man Jerseys. It is a term of the contract that if the jerseys are not delivered by the start of the play-offs, You Da Man will pay damages of $1,000 a day. This figure is a reasonable estimate of Cool Clothiers' lost profits in the event of delay. Later Cool Clothiers is told that the Blue Jays jerseys will be late. The Blue Jays don't make the play-offs, the New York Yankees do, and Cool Clothiers make a profit of $10,000 on Yankee jerseys that it picked up once it knew the Blue Jays jerseys would be late. The Blue Jays jerseys were delivered 15 days late, resulting in an actual loss of $1,000. Cool Clothiers sues You Da Man for breach. What are its recoverable damages? (Ignore the effect, if any, of mitigation.)

A)$1,000
B)$10,000
C)Zero
D)$15,000
E)$9,000

Question 26

Annie Leonard buys a computer from Technicon Co. for $2,000 on terms. Annie puts $100 down as a deposit, promising to return in a week with the balance and pick it up. She decides not to complete the deal. Technicon's profit on a computer sale is $1,000. What happens now?

A)Annie can get her deposit back.
B)Technicon can keep the deposit but cannot sue Annie for the loss of profit.
C)Technicon can keep the deposit and sue Annie for $1,000.
D)Technicon must refund the deposit but then can sue Annie for the loss of profit.
E)Technicon can keep the deposit, deliver the computer to Annie, and sue her for $2,000.

Question 27

Nerdo Computers had an insurance policy on its premises, for which it paid a premium of $525 per year. It found a new broker who offered a much lower rate, so it wrote to its current broker to cancel its existing policy. The broker replied that there would be a $100 cancellation fee. Which of the following facts or arguments would help Nerdo avoid having to pay the fee?

A)If the fee is not mentioned in the contract
B)If the fee can be characterized as a penalty
C)If the fee is not a genuine pre-estimate of damages.
D)Both B and C
E)All of the above

Question 28

Jason agrees to buy a computer for $2,000 and puts $100 down to hold the computer, promising to return in a few days to pay the balance. Jason has an acute case of buyer's remorse and decides he doesn't want the computer. Which of the following is TRUE?

A)The $100 payment is called a deposit in law.
B)Jason has a legal right to the return of the $100 because he cancelled the deal.
C)Jason has a legal right to the return of the $100 because he didn't get the computer.
D)Jason has no legal right to get the $100 back
E)Both A and D

Question 29

Carla Wolfe orders some inventory from Supplex Co. Carla calculates that if Supplex is late in delivery, she will lose about $100 a day in profits. They agree to specify in the purchase order that Supplex will pay Carla $100 a day if late. What is this clause called?

A)Penalty clause
B)Liquidated damages clause
C)Pre-estimated clause
D)Guarantee clause
E)Defeasance clause

Question 30

Which of the following statements is true about a deposit?

A)it is an amount paid at the beginning of the contract as a sign of good faith
B)it can be forfeited if the transaction is not completed by the fault or choice of the depositor
C)All of the above
D)it can be accepted by the innocent party as the complete payment or remedy for damages and the innocent party cannot sue for more
E)it will be considered a penalty if it exceeds more than 10% of the total price

Question 31

Which of the following assists a purchaser in attacking the validity of an exemption clause in a contract?

A)Interpretation
B)Parol evidence
C)Fundamental breach
D)Misrepresentation
E)All of the above

Question 32

Which of the following statements is TRUE? The concept of fundamental breach

A)produced considerable inconsistencies in court decisions
B)was limited by the Supreme Court decision in Tercon Contractors
C)was applied in an unpredictable way to limitation and exclusion clauses
D)All of the above
E)None of the above

Question 33

In the two cases of Trigg and Fraser Jewelers, the Ontario Court of Appeal reached opposite decisions, upholding the limitation of liability clause in one case but not the other. What reasons did the court give that can explain this result?

A)Mr. Trigg did not have notice of the exemption clause whereas Fraser Jewelers did.
B)The burden of proof was on the defendant in the Trigg case but on the plaintiff in Fraser Jewelers.
C)In Trigg, there was a misrepresentation by the sale agent; in Fraser Jewelers, there was none.
D)In Trigg the damage was so great it would be unfair to not give him damages
E)In Fraser the damages were too remote

Question 34

Sal needs an apartment desperately because he wants to leave his wife. There is a severe shortage of apartments. Sal finds one for $1,000 a month. The landlord insists Sal give a $5,000 deposit and Sal pays it. The next day Sal and his wife reconcile, so Sal wants to get out of the lease. Which of the following is true?

A)The $5,000 payment is called a deposit in law.
B)This deposit is forfeited automatically.
C)Sal can attack this requirement to pay $5,000 as a penalty clause in order to get the money back.
D)This $5,000 payment is called a down payment in law.
E)Both A and B

Question 35

The key difference between a deposit and a down payment is which of the following?

A)if the agreement is breached, the holder can deduct any actual loss from the down payment, but must refund the balance. With a deposit, the holder can keep the entire amount no matter what the actual loss is;
B)if the agreement is breached, the holder cannot deduct any money from the down payment. With a deposit, the holder can only keep a part of the money;
C)there is no difference between the two
D)a deposit cannot exceed more than 10% of the total price but a down payment can
E)a down payment cannot exceed more than 10% of the total price but a deposit can

Question 36

Julia Staines entered into an agreement with Cellco for the provision of a cell phone. The agreement which she signed provided as follows:
Late payment charge increase
Due to an increase in the prime interest rate, effective January
1, 2008, Cellco increased the amount it charges on overdue
Accounts to 1.25% per month or 16.07% per year.
Julia had possession of the cell phone for only three months when she started missing the due dates for payment of the charges she incurred. Julia decided to review her statement from Cellco and saw that she was being charged interest of 1.25% per month. She has decided to challenge the amount charged for interest in Court. Which of the following statements applies to the situation?

A)no interest should be charged on her account
B)the rate of interest charged is legal
C)the rate of interest charged breaches the Canada Criminal Code
D)the rate of interest cannot exceed the prime interest rate
E)this rate of interest would be considered a penalty

Question 37

Which of the following is NOT a consideration when deciding whether a disclaimer clause should be effective since the Tercon Contractors decision?

A)did the disclaimer clause apply to the specific facts of the case
B)was the clause unconscionable at the time the contract was formed
C)was their unequal bargaining power when the contract was formed
D)are there public policy reasons why the disclaimer should not be enforced
E)all of these factors are considerations

Question 38

Another name for an exemption clause is:

A)An entire agreement clause.
B)A disclaimer
C)A venue clause
D)A liquidated damages clause
E)Both C and D

Question 39

Which of the following statements is FALSE? Cancellation charges

A)are legal so long as they are not a penalty
B)must be stated in the original contract
C)cannot exceed 15% of the total price of the contract
D)must be a fair pre-estimate of damages
E)are frequently used in the hotel industry

Question 40

Which of the following will be used in determining the enforceability of a liquidated damages clause in a contract?

A)The naming of the clause a "liquidated damages clause".
B)A statement by the parties that if the contract is breached a set amount of money will be paid by the party in breach to the innocent party.
C)An acknowledgement in the clause that the damages set out are a realistic estimate of loss.
D)At the time of making the contract the dollar amount is a genuine pre-estimate of the damages that would result from a breach.
E)A statement in the clause that the damages payable are not a penalty.

Question 41

Monte Miller buys a television from Discount Electronics on credit. Discount gives a written assignment of the debt to Metro Finance Co. When Metro demands its first monthly payment from Miller, he says that the television needed a repair and he is deducting the cost thereof from his payment. Can Monte do this? Why or why not?

A)No. This was a statutory assignment, not an equitable assignment, so it was not "subject to the equities".
B)No. There was no privity of contract between Monte and Metro.
C)Yes. Metro, as assignee, can stand in no better position than Discount, the assignor, and Discount would be responsible for the cost of the repair.
D)No. Monte may have a good case against Metro, but he will have to sue. He cannot simply deduct the cost of repairs from his payment.
E)Both A and B

Question 42

In a contract between Samsung and Best Buy for the purchase of 5,000 television sets, it stated that the laws of Korea would apply if there are any legal disputes. This is an example of a

A)governing law clause
B)venue clause
C)arbitration clause
D)an entire agreement clause
E)liquidated damages clause

Question 43

Mark bought a dining room set from Lyons Furniture Ltd. The contract stated that Mark was to pay $200 per month for 2 years. Lyons decided to sell Mark's contract to the Star Finance Co. Mark was notified and he was very angry as he did not want to make payments to a finance company. As a result which of the following statements is FALSE?

A)Mark must make the payments to Star
B)Lyons made an assignment of its original contract to Star
C)Mark's consent is not required for this transfer to Star
D)Mark cannot sue Lyons for this change
E)Lyons made a legal novation

Question 44

In order to charge interest on outstanding accounts, the method of calculating the interest, as well as the total interest charged, administrative costs or other fees must be set out specifically in the contract. Which of the following statements is TRUE?

A)The total interest charged may not exceed 45% per annum.
B)Only the interest rate has to be stated for it to be a legal charge.
C)This is required for consumer transactions only
D)This is required for all contracts regardless of the parties.
E)The interest must be expressed in a monthly form totaling no more than 50% annum.

Question 45

The effect of an arbitration clause in a contract is that:

A)Neither party may sue in a dispute over the contract.
B)A dispute over the contract can be heard by arbitration or by trial at the option of the aggrieved (innocent)party.
C)Any dispute over the contract must be tried before a judge without a jury.
D)Any dispute over the contract must be tried by a judge and jury
E)None of the above.

Question 46

Privity of contract means

A)only the parties that made the contract are entitled to its benefits or can sue to enforce it
B)all contract terms must be kept private and not shared with other parties
C)family members have a right to enforce contracts other family members make
D)employees can enforce contracts on behalf of their employers
E)the parties who made the contract can add on other parties to the contract later on

Question 47

Andy Acer was a mature student at Ranier College. He sold his textbooks to Jane Deller for $500, but in addition, Jane agreed to tutor Andy in his math course. Andy delivered the books to Jane who paid him $500. Jane tutored Andy for half of the math course when he died in the middle of the semester. Andy's daughter, Katie Acer, who was also enrolled at Ranier, signed up for the math course the semester following her father's death. She demanded that Jane tutor her in the course. Which of the following statements applies?

A)Jane must tutor Katie in math
B)Jane must return the $500 to Katie
C)there is no privity of contract between Katie and Jane therefore Katie is not entitled to the benefit of Jane's tutoring;
D)Katie is entitled to damages equivalent to the cost of one semester of tutoring
E)Both B and D

Question 48

Which of the following statements accurately states the requirements for a statutory assignment?

A)notice of the assignment must be given in writing to the debtor
B)in most provinces, notice of the assignment must be signed by the person making the assignment.
C)the assignment must be complete transfer
D)the assignment must not have any restrictions on it
E)all of the above.

Question 49

Monte Miller buys a television from Discount Electronics on credit. Discount gives a written assignment of the debt to Metro Finance Co., but neglects to mail notice of the assignment to Miller until a few months later. In the meantime, Metro assigns the debt to Live Finance Co., which immediately sends notice of it assignment to Miller. Discount refuses to cooperate with either Metro Finance or Live Finance in collecting the debt. Which of the following statements is TRUE?

A)The assignment to Live is unenforceable because it was fraudulent. A creditor cannot assign the same debt twice.
B)The assignment to Live is unenforceable because it is not complete and unconditional.
C)The assignment to Metro takes precedence over the one to Live because it was made first.
D)The assignment to Live is enforceable as an equitable assignment.
E)The assignment to Live takes precedence over the earlier one to Metro because Live gave notice to Miller first.

Question 50

The Supreme Court recently made an exception to the privity rule when it allowed

A)indirect third party purchasers sue manufacturers for price fixing under the Competition Act
B)class actions against the government by striking government workers
C)pay day loan companies to set very high interest rates
D)cooling off periods for door to door sales
E)class actions by consumers against hospitals that released private information

Question 51

An equitable assignment operates where:

A)the assignor must be a party to any litigation
B)the assignor must be part of any settlement
C)the assignor retains an interest in the contract
D)there are conditions on the transfer
E)all of the above

Question 52

Which of the following statements is TRUE? Interest rates

A)cannot exceed 60% per annum under the Criminal Code
B)can exceed 500% in some provinces for pay day loans
C)must be stated as an annual rate or the lender can only charge 5% per annum
D)must disclose all fees and administrative costs tied into the interest rate for consumer loans
E)all of the above

Question 53

An Ontario company and a New Jersey company enter into a contract with each other. The contract has a venue clause naming Ontario, and a governing law clause naming Rhode Island, and a mediation clause which states that in the event of a dispute the parties must attempt mediation before suing. Which of the following statements is TRUE?

A)Any lawsuit over the contract will be heard in Ontario.
B)Any lawsuit over the contract will be governed by the laws of Rhode Island.
C)Any lawsuit over the contract will be governed by the laws of Ontario
D)Both A and B
E)None of the above

Question 54

Usuryx Co. charges interest on all credit. On its credit application form the term is stated as "interest on unpaid balance over 30 days at 1% per month." Slident Co. has an amount owning beyond the 30 days period. Which of the following statements is TRUE?

A)Slident will have to pay interest at the rate of 1% per month.
B)Slident will have to pay interest at the rate of 5% per annum.
C)Slident will not have to pay any interest because the term violates the Interest Act.
D)Slident will have to pay interest at 12% per annum.
E)Slident will have to pay interest at 12% annually but not any administration costs.

Question 55

In a contract between The Bay and Chanel it stated that any legal disputes would be heard in the courts in Paris, France. This is an example of a

A)governing law clause
B)venue clause
C)mediation clause
D)arbitration clause
E)both A and B

Question 56

An assignee is

A)an original party to the contract
B)a third party to whom rights under a contract have been transferred
C)a third party to whom rights under a contract have not been transferred
D)a party who is liable for the debts of another
E)a party who is transferring all of their liability to another

Question 57

A venue clause states

A)Which country's laws will govern any lawsuit over the contract.
B)In which jurisdiction (country, province, state)the trial of any dispute over the contract will take place.
C)That any dispute over the contract must be heard by arbitration.
D)Both A and C
E)All of the above.

Question 58

A venue clause determines which of the following

A)the place for a contract to be made
B)the place for a contract to be performed
C)B and C above
D)the place a trial over a contract dispute will take place
E)the place where goods are to be shipped to

Question 59

A venue clause is

A)One type of arbitration clause.
B)A liquidated damages clause
C)A forfeiture clause.
D)An exemption clause
E)None of the above

Question 60

Which of the following is an exception to the privity rule?

A)rights of a plaintiff to sue an employer when their employee causes damages
B)rights of a plaintiff to sue a parent for damages their child caused
C)rights of a beneficiary of a life insurance policy to sue an insurance company if they are not paid
D)rights of a lender to sue a wife for the debts of her husband
E)all of the above illustrate the privity rule

Question 61

Standard form contracts are essential for the functioning of business today.

Question 62

A collateral contract can be used as a

A)way to secure a loan from a bank
B)way to get around the parol evidence rule
C)way to enforce a cancellation charge
D)way to avoid a disclaimer clause
E)way to factor accounts receivable

Question 63

A liquidated damages clause will be enforced by the court if at the time the contract is
made the amount is a genuine pre-estimate of the damages that a Court would award.

Question 64

There is a strong presumption that the written terms in a contract govern.

Question 65

Factoring of accounts receivable is an example of

A)a novation
B)an assignment
C)the privity rule
D)a venue clause
E)a breach of contract

Question 66

An entire agreement clause tries to prevent exceptions to the parol evidence rule being made by a court.

Question 67

Express terms are those terms which are actually stated by the parties to the contract.

Question 68

A novation is

A)an assignment
B)a new contract
C)a new party added to an existing contract
D)an exception to the privity rule
E)a new term added to a contract

Question 69

An "entire agreement clause" is a term in a contract in which the parties agree that the
contract is not complete as written.

Question 70

Online agreements often have

A)a venue clause
B)a governing law clause
C)an arbitration clause
D)a mediation clause
E)all of the above

Question 71

Sue buys a stove from Leons and is to pay $300 per month for 15 months. Shortly after she gets the stove Leons tells her that she is to make her payment to the Ace Finance company. Sue is furious and does not want to deal with Ace. Sue sends a letter to Ace saying that she is transferring her debt obligation to her father Donald. As a result

A)Sue must pay Ace as it is a valid novation
B)Donald and Sue are both liable to Ace now
C)Donald must pay Ace as it is a valid assignment
D)Ace can insist payments must be made by Sue and not by Donald
E)Sue only has to pay Leons, since she never made a contract with Ace

Question 72

The Court applies a subjective test to determine what a reasonable person would have thought the words used in the contract meant.

Question 73

Which of the following statements is FALSE?

A)equitable assignments are valid assignments
B)benefits can be assigned
C)duties can be assigned
D)all statutory assignments must be in writing
E)equitable assignments do not have to be in writing

Question 74

Tom agreed to buy Lisa's house for $1,000,000 and paid a $100,000 down payment. But as the closing date approached house prices began to drop so Tom refused to complete the deal. Lisa then resold the house for $800,000. As a result, which of the following statements is FALSE?

A)Tom will get back his $100,000
B)Tom will not get back his $100,000 but that is all he has to pay
C)Tom will not get back his $100,000 and he will also have to pay Lisa $100,000 more
D)Tom will not get back his $100,000 and he will also have to pay Lisa $200,000 more
E)Tom will not get back his $100,000 and he will have to pay pecuniary and punitive damages

Question 75

Exemption clauses in a contract limit or eliminate damages or other relief that a
Court would normally award against the party who breached the contract.

Question 76

The court will imply terms in a contract based on the party's expectations and which are
necessary to give effect to the agreement.

Question 77

The officious bystander test is considered when the court

A)inserts an implied term into a contract
B)determines if a cancellation charge is a penalty
C)an assignment is valid
D)the privity rule is challenged
E)an entire agreement clause is challenged

Question 78

A standard form contract is an offer made in a printed document, the terms are the same for all customers and it becomes a contract when signed (accepted)by the customer.

Question 79

There are no exceptions to the parol evidence rule.

Question 80

Which of the following statements is FALSE?

A)courts will use a dictionary if the terms in a contract are unclear
B)deposits are not returned if a buyer wants out of a sales contract unless it is a penalty
C)actual stated terms in a contract are called express terms
D)there is a duty to act in good faith when carrying out a contract
E)the doctrine of fundamental breach has been expanded by the Supreme Court of Canada
TRUE/FALSE QUESTIONS