Deck 8: Non-enforcement of Contracts

Question 1

In contract law,the presence of which of the following elements would immediately alert a court to the possibility that an agreement may be voidable due to duress?

A) An error by one or both parties seriously undermines a contract.
B) The use of a threat of physical harm resulted in a contract.
C) Unfair manipulation compromises one party's free will.
D) A false statement of fact causes someone to enter a contract.

Answer 1

B

Question 2

Holding a gun to someone's head to induce the individual 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

Answer 2

B

Question 3

Under Canadian law,children and mentally ill individuals are granted special legal protection.Why is it necessary for the law to distinguish these groups of people by affording them this consideration?

A) Both groups lack substantial mental capacity to make binding legal decisions.
B) Both lack legal capacity to be able to enter into binding contracts.
C) Both groups lack experience to make binding legal decisions.
D) Both lack functional mental capacity to understand binding legal commitments.

Answer 3

B

Question 4

The law is concerned with circumstances that involve formation of contractual relations,particularly where one party takes advantage of the other's unsophistication in relation to commercial matters and their legal consequences.How will a court,hearing a matter involving such a dispute,arrive at a determination as to whether such an advantage actually existed?

A) The unsophisticated party must prove undue influence was present.
B) The unsophisticated party must prove the presence of the actual pressure.
C) The more powerful party must prove the absence of the actual pressure.
D) The more powerful party must prove the absence of the presumed pressure.

Question 5

Which of the following would immediately let you know that a contract contains an element that would cause a court to hold that the contract is unenforceable?

A) a desire to end a contract for economic benefit
B) a failure to diligently negotiate a good outcome
C) an auxiliary mistake concerning the contract
D) an inequitable relationship between the parties

Question 6

Where circumstances surrounding a proposed commercial transaction involve an unsophisticated party,which of the following 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 7

In the case of Pao On v.Lau Yiu Long [1979],3 All E.R.65 (P.C.),the court was asked to determine a commercial contractual dispute arising from alleged economic duress.In order to meet the traditional common law test,which of the following would the court require evidence of in order to void the contract?

A) cogent behaviour exemplifying industry norms
B) coercion exceeding typical commercial bullying
C) coercive pre-contractual behaviour contrived by negotiating parties
D) cogent pre-contractual behaviour contrived by negotiating parties

Question 8

Once negotiations are complete and a formal contract executed,which of the following exerts the greatest influence on the law's focus on the enforcement of the contract?

A) the endeavour to achieve a good faith between two competing goals
B) preservation of the integrity, predictability, and reliability of contractual relationships
C) the endeavour to preserve the real agreement reached by the parties
D) preservation of good faith, honesty, and diligent conduct in contractual relationships

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

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.Which of the following could immediately render the contract 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 incapacity to grasp the essence and effect of the contract.
D) The individual lacking legal capacity is unable to perform the contract in whole or in part.

Question 11

In recent Alberta and Ontario appellant court decisions,the courts have regarded unconscionability as involving a four-step procedure.Which of the following could you reasonably expect a judge to now recognize as an additional step to be considered over and above the traditional two-step procedure?

A) proof of improvident bargain or proof of exploitation in a contractual deal
B) imbalance in bargaining power due to ignorance of the language of the bargain
C) a sufficient divergence from community standards of commercial morality
D) proof of inequality between the parties entering into a contractual bargain

Question 12

Even though Dalbert knew Rahim had consumed copious amounts of alcohol during the afternoon,both signed a contract written on a napkin whereby Rahim agreed to buy Dalbert's old car for top dollar.Upon regaining his legal capacity,should Rahim opt to repudiate the contract on the basis of an improvident agreement,how must he proceed to void the contract?

A) He must claim relief due to effects of duress.
B) He must claim relief due to economic duress.
C) He must claim relief due to undue influence.
D) He must claim relief due to unconscionability.

Question 13

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 14

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 15

In the case of Greater Fredericton Airport Authority v.NAV Canada [2008],NBCA 28,the court was asked to resolve a dispute involving forced concessions made under threat of breach of contract.In this instance,the court suggested that proof of economic duress could arise upon establishment of what type of evidence by the innocent party?

A) an innocent party's lack of a realistic alternative
B) an innocent party's lack of an economical alternative
C) an innocent party's lack of a viable alternative
D) an innocent party's lack of a practical alternative

Question 16

Which of the following exemplifies what is meant by the legal term "voidable contract"?

A) a contract that cannot be enforced because it is contrary to legislation or public policy
B) a contract that fails to meet the requirements imposed by the Statute of Frauds
C) a contract that fails to meet the requirements imposed by the Sale of Goods Act
D) a contract that allows an aggrieved party to choose to keep it in force or bring to an end

Question 17

Which of the following would affect the status of a contract entered into by a minor upon that individual attaining the age of majority?

A) The contract is ratified after attaining legal capacity.
B) The contract involves enforceability by some statute.
C) The contract involves a non-continuing interest.
D) The contract is of a permanent or continuous nature.

Question 18

In the case of Atlas Supply Co.of Canada v.Yarmouth Equipment (1991),103 N.S.R.(2d)1 (N.S.C.A.),disallowed reliance on the defendant's exclusion clauses to prevent evidence of the plaintiff's reliance on misleading information provided by the defendant.The dissenting appellant court judge cautioned against setting aside business deals such as this one.What was the dissenting appellant court judge advocating by taking this position?

A) that a small businessperson needs protection from unconscionable big businesses
B) acceptance of bad faith misrepresentations as a legal commercial negotiating practice
C) acceptance of unconscionable misrepresentations as grounds to set aside a contract
D) that a small businessperson is disadvantaged when dealing with a multinational business

Question 19

Which of the following would your law professor most likely state as being the elements of importance emphasized by contract law as it pertains to legal capacity to form contracts?

A) offer and acceptance
B) essentials of a contract
C) immunity from liability
D) consent and voluntariness

Question 20

With respect to contractual relationships,which of the following is the definition of "undue influence"?

A) a false statement of fact that causes someone to enter a contract
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 21

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 risk of an ensuing law suit?

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 prompt disclosure of correct facts to the prospective buyer.

Question 22

With respect to misrepresentation of relevant facts,how is a willful omission with regard to relevant information during pre-contractual negotiations regarded in law?

A) as a false statement of fact that causes someone to enter a contract
B) as permissible because each party must look out for their own interests
C) as an error made by one or both parties that seriously undermines a contract
D) as a breach of the duty to disclose information without being prompted

Question 23

Which of the following criteria must be satisfied in order for a misrepresentation to be actionable?

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

Question 24

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 25

Why did the Supreme Court of Canada,in 2009,expressly reaffirm that restrictive covenants in the sale of a business are subject to less scrutiny than other applications of restrictive convenants?

A) because the clauses are typically reasonably clear as stated
B) because there is typically a power balance in business transactions
C) because the clauses are typically time limited and less intrusive
D) because the vendor typically receives consideration for good will

Question 26

Most provincial jurisdictions in Canada have enacted legislation to provide a form of protection to consumers by setting unconscionability as a standard for the assessment of fairness of the bargain.Which of the following elements of this legislation is most similar to elements addressed in separate,related consumer loan protection legislation?

A) The price grossly exceeded the price for similar, readily available goods or services.
B) Physical infirmity or ignorance prevent the consumer from reasonable self-protection.
C) There was no reasonable probability of payment by the consumer of the obligation.
D) Illiteracy prevented the consumer from reasonably protecting his or her interests.

Question 27

Under the classic model of illegality,a freely chosen contract will be held unenforceable by a court in which of the following circumstances?

A) It is contrary to common law and/or violates public policy.
B) It is contrary to statue law and/or violates public policy.
C) It is contrary to public policy and/or the doctrine of good faith.
D) It is contrary to public policy and/or the doctrine of illegality.

Question 28

Which of the following is a valid requirement under the federal Secure Electronic Signature Regulations issued in 2005?

A) to facilitate association of a person's typewritten name with their unique signature
B) to ensure that a typewritten names bind electronic contractual obligations
C) to ensure documents and signatures are evidenced in written form.
D) to ensure alterations to a document after it was signed can be evidenced

Question 29

Which of the following could you reasonably expect that a lawyer would advise his client is a definition of a "guarantee"?

A) a fair contract formed by one advantaged party over another
B) a pledge evidencing 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 30

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 31

In a recent 2009 ruling,the Supreme Court of Canada found it necessary to direct that judges in lower courts were prohibited from redrafting overly broad non-competition clauses to make them legal and enforceable,stating that such clauses are simply and utterly unenforceable.Why did the Supreme Court find it necessary to invoke this prohibition?

A) to restate policy that vague or ambiguous clauses are unenforceable
B) such clauses improperly bind employees unable to afford litigation costs
C) such clauses are difficult to prove when the meaning is in fact unclear
D) to restate a central policy objective to facilitate drafting of broad clauses

Question 32

Which of the following would your law professor most likely state as being 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 33

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 34

Which of the following categories of actionable misrepresentations entitle an innocent party to a common law remedy in damages?

A) fraudulent and negligent misrepresentation
B) fraudulent and innocent misrepresentation
C) innocent and negligent misrepresentation
D) negligent and factual misrepresentation

Question 35

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 36

In common law,contracts that unduly interfere with the ability to earn a livelihood or reduce competition are generally unenforceable.Why is this so?

A) They contravene the rules of good will 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 37

Which of the following would a judge indicate as forming 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 38

With respect to non-competition clauses,which of the following is an element that would be considered by a court when determining enforceability 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 39

Where both parties to an agreement have shared the same fundamental mistake,how does the common law classify the situation 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 40

Which of the following had the greatest influence on the early courts in Britain with respect to their inclusion of a provision in the Statute of Frauds requiring contracts that were to be performed after the passage of one year's time to be evidenced in writing?

A) to maintain the integrity of the contractual language by all of the contractual parties
B) to facilitate spreading writing skills amongst the early citizens of the British kingdom
C) to avoid difficulties presented by the passage of time with proving past oral promises
D) to safeguard the commercial viability of the business of practising contract law

Question 41

Intoxication is regarded as a form of mental incapacity under the law.

Question 42

In circumstances where one party provides only partial information to the other side during negotiations to induce that party to enter into contractual obligations,the contract will likely be enforced by the courts despite the misrepresentation of relevant facts.

Question 43

An employer can never be awarded damages for breach of a beneficial contract of service by a minor.

Question 44

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 45

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 46

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 47

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 48

The purpose of the Statute of Frauds is to prevent fraud and perjury regarding certain kinds of contracts

Question 49

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

Question 50

A beneficial service contract is enforceable as long as it was commercially viable for the business owner employing a minor.

Question 51

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

Question 52

If possible,the courts will redraft an offending provision in a contract to make it legal.

Question 53

Where a relationship that exists between a lawyer and client,the court is entitled to assume that presumed pressure with respect to undue influence does not inherently exist.

Question 54

In British Columbia,the interests of under-age-of-majority children are protected by the Infants Act.

Question 55

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

Question 56

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 57

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

Question 58

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

Question 59

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 60

An lawyer selling his practice initially provided information regarding its value that his accountant later informed him was inaccurate.The lawyer is not required to disclose this new fact to the lawyer interested in purchasing the practice as both are commercially and legally sophisticated players,who are fully capable of watching out for their own interests.

Question 61

With respect to a contractual relationship,identify the types of remedies for mispresentation available to the affected parties and how they are applied.

Question 62

Identify and briefly explain the relevance of a misrepresentation of relevant facts with regard to an insurance contract?

Question 63

What must be proven in order to have a contract set aside for misrepresentation?

Question 64

What interests do the courts balance in deciding whether a noncompetition covenant,preventing an employee from leaving and going into competition with her former employer,is enforceable? What is the test applied by the courts?

Question 65

Identify and describe four classes of contracts that must be written in order to be enforceable in most provinces.

Question 66

Identify the circumstances where parties would be considered to have breached the requirement to disclose information without the need to be prompted to provide it during contractual negotiations.

Question 67

What is an "electronic signature," and is it legally valid?

Question 68

Johan is a director on the board of a corporation considering entering into a contract with a company in which Johan holds a beneficial interest.Johan has decided it is in his best economic interests not to disclose this fact to the board.Discuss the possible legal consequences,if any,that may befall Johan as a result of his decision.

Question 69

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 70

When is a contract considered to be contrary to public policy? Give an example.

Question 71

If a contract is one that the Statute of Frauds requires must be written in order to be enforceable,what must appear in writing?